Trading indicators

Market indicators are an integral component of technical analysis. They help traders in making market decisions. Some indicators are designed to show the direction of a trend while others simply tell when a trend reversal is imminent. In this article, we look at one of the many trading indicators: the Aroon indicator. The Aroon indicator…

The DMI is often known on most trading platforms by its third component, the average directional index (ADX). Not many know what the DMI is. Let’s take a look at it. The DMI (directional movement index) is a trend indicator that shows the strength of a trend, irrespective of the direction. It has two main…

Technical indicators offer powerful insights into what is happening in the market. While price is a factor in technical analysis, volume is as important as price as this tells traders the level of activity on a given security. The on-balance volume is one of the most popular volume indicators. Let’s find out what it is….

Technical indicators help traders in timing the market, and the CCI is one of the indicators you can effectively use to time the momentum in the market. But what exactly is the CCI, and what does it tell you about the market? The CCI (Commodity Channel Index) is a technical indicator that measures the current…

It seems that traders are becoming increasingly interested in the classical methods of technical analysis, and the use of trading channels have become popular again in the 21st century. Since Williams Volatility Channel is getting very popular among traders, you may be wondering what it is. Williams Volatility Channel is a trend-following indicator developed by…

The Put-Call ratio is a popular sentiment indicator. Extreme readings, mostly signaling panic and climax, are often used as contrarian signals to fade the market. For example, a high put reading might signal that traders and investors are panicking and are buying downside insurance (put options act as insurance) and that a market bottom is…

Can you make money on a bullish or bearish AAII market sentiment indicator? When the pessimists turn optimistic and the optimists turn pessimistic a bottom or top is formed. If you understand market sentiment and where traders and investors feel the most pain or euphoria, you have gained a wealth of knowledge about potential turning…

The Death Cross in trading is a widely cited phenomenon in the financial media. As of writing, the media is full of stories about the price of Bitcoin being close to the Death Cross. In this article, we look at the performance of the Death Cross in the S&P 500. A Death Cross involves two…

Is high short interest good or bad? Short interest in trading has been a hot topic during 2021 after Gamestop made short-sellers run for cover at prices many times higher than their entry price. But was the short squeeze in Gamestop an outlier? Which stocks perform better – stocks with high or low short interest?…

Below we have assembled the trading indicators we have covered so far. It’s a work in progress and many more trading indicators are added in the future. Unlike many other websites, we are not interested in anecdotal evidence and thus we have backtested all the trading indicators. Indicators and how they work (including quant systems):…

Zweig Breadth Thrust Indicator is a market breadth indicator that helps you understand the internal strength of the market, at least that’s what the theory says. There are many breadth indicators – among them the Zweig Breadth Thrust Indicator (one of many). The best way to measure market breadth is by looking at the number…

Many momentum oscillators tend to turn very positive at the beginning of a major advance and quickly enter the overbought territory or even show bearish divergence while the market is still advancing. The ultimate oscillator attempts to correct that. Let’s find out what this oscillator is made of. The ultimate oscillator (UO) is a momentum…

Weekly RSI vs daily RSI – what is best? This is a bit like comparing apples to oranges. It might be the same indicator, but RSI can deliver substantially different risk and reward payoffs in different time frames. Risk and reward are matters you can only answer yourself through backtesting. If you are a swing…

Cutler’s RSI including backtest The RSI is a very popular trading indicator among different security traders. But there are other variations of the RSI indicator. One of them is Cutler‘s RSI. You may be wondering what it is, and in this article, we provide you with a description and how it performs in backtests. Cutler’s…

The Investors Intelligence Index is becoming widely accepted as a means of estimating the balance between the bulls and bears. But what does it actually mean? Also known as the Advisor Sentiment, Investors Intelligence Sentiment Index is based on contrarian propositions, which suggest equity traders should act opposite to the balance of expert opinion and…

Hindenburg Omen Indicator: how do you use it and what is it? Stock market crashes can wipe out traders’ and investors’ profits or even put them at a huge loss in no time. If you have been in the market long enough, you will know that stock market downturns always happen faster than the preceding…

There are many technical indicators out there that are not frequently used in everyday trading but can be useful for analyzing previous price actions to easily spot useful patterns and trends. One of such tools is the Zig Zag indicator. The Zig Zag indicator is a basic tool that analysts use to analyze the price…

As a trader or investor, it is necessary to understand the mood of the market at every point in time, and market sentiment can be a powerful tool for that. But what is market sentiment and how do you measure it? Also known as investor attention or crowd psychology, market sentiment refers to the prevailing…

The Chaikin Oscillator Indicator was developed by Marc Chaikin in the 1980s. It’s not widely used nor well-known, perhaps for good reasons: we didn’t manage to find any significant profitable Chaikin Oscillator Trading Strategy in any of the quantified tests we did. In this article, we briefly explain what the indicator is, how it’s calculated, and…

The stochastic indicator is a standard indicator in any trading platform, but we rarely see it published or used in any Stochastic trading strategies. Compared to the RSI, stochastics seems much less popular. Is that because it’s less useful or is this a hidden gem? The stochastic indicator does work in a stochastic trading strategy….

A reader recently asked if we use Heikin Ashi in our trading. We don’t. Neither of us has ever heard of Heikin Ashi! So what exactly is Heikin Ashi? Heikin Ashi is another version of Japanese candlesticks. Moreover, we test some additional filters to improve Heikin Ashi so we can use it as a Heikin…

Can we use the MACD indicator and the MACD histogram to make a profitable MACD trading strategy? This article looks at the MACD-indicator, what it is, and how you can use it. Does the MACD indicator work? In which markets does it work best? Which time frame is best? The MACD indicator is a useful…

In a series of articles, we want to test different indicators and trading techniques. Almost all indicators are “proved” by anecdotal evidence, and rarely quantified. That’s perhaps not a coincidence: Most of them are useless and do not have any predictive value. We backtest some Elder Ray strategies and Our aim is to figure out…