Get to Know the Most Accurate Intraday Trading Indicators | Espresso

Intraday Trading Indicators

If you have spent a number of years working with intraday trading, using trading indicators may be a habit for you. However, for those still learning the ropes of the market, here are some of the most accurate intraday trading indicators you can know about. Quite often, many traders also use a combination of two indicators for better results.



Five Most Accurate Intraday Trading Indicators

  • Moving Averages

Among intraday traders, moving averages are one of the popular technical indicators for day trading. With this indicator, one can get more knowledge of the market’s momentum, market trends, and if there’s a reversal in the trends, the stop loss and stop-loss points.

As a trader, if you feel that the market trend does not seem to be supporting your trades, moving averages help you find a trading opportunity as per the current trend of the market.

  • Bollinger Bands

Bollinger bands are one of the technical indicators for day trading that help identify the volatility in the market. This tool consists of three bands – an upper band with a +2-standard deviation, and a middle band that is a 20-day moving average and a lower band with a -2 lower deviation. Understanding this indicator is quite simple and assists traders in identifying the price range of a stock.
Also Read: Range Bound Market

During the market movements, if the volatility increases, the band will widen and with a decrease in the volatility, the band gap will also decrease. The stock price keeps moving between the upper and the lower bands as per the market movements.

  • Relative Strength Index (RSI)

Relative Strength Index (RSI) is another intraday trading indicator in this list that helps traders gauge the market’s momentum. This indicator comprises a range of 0-100 on a single line. The reading on this line indicates whether a stock has been purchased or sold over a certain limit.
Know More about Relative Strength vs Relative Strength Index

A reading above 70 shows that the stock has been purchased over the limit, while a reading below 30 indicates an oversold stock. This index is also a good indicator of the market’s trend; if the index is more than 50, the market is said to be showing an upward trend, while a marking below 50 means a downtrend.

  • Commodity Channel Index

The Commodity Channel Index is a useful day trading technical analysis indicator that gauges the rise and fall in the price movements while also identifying new market trends. By comparing the current prices to the average prices over a specific time period, the CCI can effectively track market trends.

The indicator comprises values of 0, +100 and -100, where a positive value is indicative of an upward trend, while a negative reading on the CCI indicates a downward market trend. Traders often combine the use of the CCI and RSI to understand if an asset has been over-purchased or oversold.

  • Stochastic Oscillator

The stochastic oscillator, used for day trading technical analysis, uses the support and resistance levels. This tool is used by traders along with the RSI; however, while the RSI is more effective for trending markets, the stochastic oscillator is better for a more staggered or disjointed market trend.

This tool compares a stock’s closing price to a range of prices over 5, 9 or 14 days. Traders also watch out for a divergence in the oscillator and the trending price action, which is a crucial signal of reversal.

The role of technical indicators, as given above, is important in intraday trading, a form of trading that is quite time-sensitive. It is with the help of these market indicators that traders, old or new, can easily manage their intraday trading activities.

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Frequently Asked Questions

You learn the use of technical analysis indicators as you start intraday trading. It is advisable to initially get help from a more experienced trader, apart from referring to online websites, forums and videos to know how these indicators are to be used.

Yes, it is possible to use a combination of two indicators for improved results. However, both indicators cannot be tracking two related aspects of the asset being traded.

Intraday trading indicators can show the existing momentum or the lack of it in the market. They also help traders find opportunities for trading and potential profits as per the trend of the market.

The combination of Stochastic Oscillators with Bollinger bands or Moving Average is quite common in intraday trading. But there are also other different combinations that are used by different traders.

For the most part, all technical analysis indicators are quite accurate. However, since no one can predict the market, there may be chances of minor errors. It is always better to also factor in your own intuition and expertise when it comes to intraday trading.