Understanding Technical Indicators
Technical indicators are mathematical calculations based on price, volume, or open interest data. They help traders identify patterns, trends, and potential trading opportunities in the market.
What Are Technical Indicators?
Think of technical indicators as your trading tools — each one helps you see the market from a different angle. Some show you the trend direction, others measure momentum, and some help you understand volatility or volume patterns.
Why Use Multiple Indicators?
No single indicator is perfect. That's why successful traders combine multiple indicators to:
- Confirm signals — When multiple indicators agree, the signal is stronger
- Filter false signals — Reduce noise and avoid bad trades
- Understand different aspects — Trend, momentum, volatility, and volume each tell part of the story
Categories of Indicators
Kelor provides indicators across five major categories:
1. Moving Averages
These smooth out price data to help identify trends. They're the foundation of many trading strategies.
Best for: Identifying trend direction and potential support/resistance levels
2. Momentum Oscillators
These measure the speed and strength of price movements, helping identify overbought or oversold conditions.
Best for: Spotting potential reversals and confirming trend strength
3. Volatility Indicators
These measure how much prices are fluctuating, helping you assess market risk and potential breakouts.
Best for: Setting stop-losses, identifying breakouts, and managing risk
4. Volume Indicators
These analyze trading volume to confirm price movements and identify potential trend changes.
Best for: Confirming breakouts and identifying accumulation/distribution patterns
5. Trend Analysis Tools
These help identify trend strength and direction, plus key support and resistance levels.
Best for: Understanding overall market structure and planning entries/exits
How to Choose Indicators
When building your strategy, consider:
- Your trading style — Day traders need different indicators than swing traders
- The market condition — Trending markets favor different indicators than ranging markets
- Confirmation vs. leading — Some indicators confirm trends (lagging), others predict changes (leading)
Getting Started
In the following pages, we'll explore each indicator in detail:
- How it's calculated (in simple terms)
- What it tells you about the market
- How to interpret its signals
- Best practices and common mistakes to avoid
- Real-world examples
Don't feel overwhelmed by the number of indicators available. Start with 2-3 simple ones (like SMA, RSI, and Bollinger Bands), master them, then expand your toolkit as you gain experience.
Ready to dive in? Let's start with the most fundamental indicators: Moving Averages.