The Best Technical Indicators for Intraday Trading

Whether you are an established trader or a beginner, following the basic intraday tips is a common and a recommended approach before starting the trading day. While your trading strategies change with time, it is often best to keep it simple. This is where technical indicators can help. The intraday indicators can help you understand the market. You can combine these tools with your comprehensive strategies to maximize returns. The intraday trading indicators provide quintessential information on trading such as the profit potential due to volatility, momentum within the investment market, and the direction of the trend to gauge the movement, among other aspects.

In this post, we will discuss the best technical indicators for intraday trading.

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#1 Bollinger Bands

A Bollinger band is the most popular intraday technical indicator that comprises three lines – the upper limit, the lower limit, and the moving average. These lines represent the stock’s standard deviation that is nothing but the amount by which the price decreases or increases from its average. This intraday trading indicator is used to understand the trading range of the stock.

#2 Moving Averages

You may have heard of daily moving averages (DMA) before. It is a widely used and the most common technical indicator. It is a line on the stock chart connecting the average closing rates over a certain period. The moving average is more reliable if the period is longer. This technical indicator can help understand the underlying movement of the price since the price doesn’t move in one direction only. Moving average smoothen the volatility of the stock prices and provides an understanding of the basic price movement.

#3 Relative Strength Index (RSI)

The relative strength index is one of the useful intraday technical indicators to compare the gains and losses of the share price. The traders use this information and formulate it into an index form that helps them in narrowing down the RSI score ranging between 0-100. When the price rises, the RSI increases, and vice-versa. Once the index decreases or increases to a specified limit, the trader can use this information to modify their trading strategy.

#4 Momentum Oscillators

Stock prices increase and decrease on a regular basis. There are short-period cycles that are distinct to the bearish and bullish market trends. In such situations, day traders can easily miss out on such changes. This is where the momentum oscillator is useful. This technical indicator is depicted in a range between 0-100 and it beneficial when the stock price has attained a new high or low. This also helps in determining whether the price will further fall or rise. In simple words, momentum oscillator helps in understanding the market sentiments when it is undergoing modifications.

Final Words

Regardless of whether you are trading futures, forex, or stocks, technical indicators can help you suggest the entry and exit points.

What is a trader? Video

A trader is someone who purchases and sells (trades) goods or services.