Fibonacci retracements are a widely used trading indicator that helps traders identify potential support and resistance levels during price pullbacks. It allows traders to forecast where prices might reverse within a trend. Imagine driving down a straight highway, and every time you approach a curve, there's a sign indicating how much you've deviated from the straight path. These signs show you...
Pivot Points are one of a trader's most reliable trading indicator tools. At their core, they are predetermined price levels on a price chart that signal potential areas of support and resistance levels. But instead of sounding like another technical indicator, think of Pivot Points as GPS markers for retail and floor traders. Imagine driving through a new city without a map—every intersection...
The Volume trading indicator measures the total number of shares traded for a specific stock over a time period. It tells you how much activity is behind a price move, offering valuable insight into market trends and market strength. Think of trading volume like the crowd at a sporting event. If a team scores and the crowd erupts, it’s a big moment. But if the same team scores in an empty...
Keltner Channels are a volatility-based trading indicator that helps traders identify market trends and potential reversal points. The indicator consists of three separate lines: a middle line (Channel Middle Line) using an exponential moving average (EMA), and two outer bands above and below the moving average. The outer bands adjust based on the Average True Range (ATR), which measures market...
The Detrended Price Oscillator (DPO) is a technical analysis trading indicator used to remove trends from price data, helping traders focus on shorter-term cycles. Essentially, DPO attempts to remove trends by stripping away the "noise" caused by long-term price movements, allowing traders to identify cycles that might otherwise be hidden. Think of the DPO as cleaning a window: It removes...
Trading volume is often the silent companion to price trend movements, understanding it can unlock deeper insights into volume analysis, and one tool that helps traders do just that is the volume rate of change trading indicator. Think of trading volume as the engine behind the average price. When the engine revs up (high volume), the price trend moves faster and becomes stronger. The volume...
Donchian Channels, developed by Richard Donchian, are a trading indicator designed to help traders determine market volatility and identify potential entry and exit points. For systematic traders, this clarity is essential for developing consistent, rules-based strategies that reduce the emotional roller coaster often experienced in discretionary trading.Donchian Channels are made up of three...
The McClellan Oscillator is a market breadth tool that is used as a key trading indicator to analyze the overall stock market rather than individual stocks. Developed by Sherman and Marian McClellan in the 1960s, it measures market trends by evaluating the number of advancing and declining stocks. This helps traders gauge whether the market is bullish or bearish. Think of the McClellan...
The VIX (Volatility Index), often referred to as the fear index, measures the market’s expectations for volatility over the next 30 days and may be used as a powerful trading indicator. Launched by the Chicago Board Options Exchange (Cboe) in 1993, it reflects market expectations by capturing the price movement of index options on the S&P 500. To make it relatable, think of the VIX...
The Schaff Trend Cycle trading indicator (STC) is a technical analysis tool that can help stock traders identify trend changes and potential reversals. In simple terms, it’s a momentum indicator that combines moving average convergence divergence (MACD) with a cycle component to forecast when trends are likely to exhaust themselves or reverse. Imagine you're driving on a road trip, and you have...
The Darvas Box is a technical analysis trading indicator designed to help traders identify stocks that are breaking out of established price ranges. In simple terms, it’s like a "box" that forms when a stock price moves between a new high and a low price. Once it breaks above this new box, it’s time to take action. Imagine a stock trading within a trading range, bouncing between the top of the...
Williams %R, or the Williams Percent Range, is a momentum oscillator trading indicator that helps traders identify overbought and oversold conditions. It moves between 0 and -100, showing where the current price sits relative to its recent high-low range. Think of the Williams %R indicator as a fuel gauge in a car, when the indicator is near -20, the market is "full" and potentially overbought....