Indicators
Reading the market — beginner, intermediate, and advanced.
Beginner — Price & trend
Moving averages
A moving average smooths price. SMA = simple average; EMA = exponentially weighted (reacts faster). Price above MA = uptrend, below = downtrend.
RSI
Relative Strength Index (0–100). Above 70 = overbought, below 30 = oversold. Use for momentum, not as a standalone buy/sell.
Support & resistance
Support = price where buying emerges; resistance = where selling emerges. Breaks of these levels often accelerate.
Volume
Volume confirms moves: a breakout on high volume is stronger than one on low volume.
Intermediate — Momentum & volatility
MACD
Moving Average Convergence Divergence. MACD line crosses above signal line = bullish; below = bearish. Histogram shows momentum strength.
Bollinger Bands
Price ± 2 standard deviations around a 20-bar SMA. Price at the band edge = stretched; middle band = mean. Squeeze = low volatility before a breakout.
ATR
Average True Range — measures how much a market moves per bar. Use it to size stops: 1×ATR is a normal move, 2×ATR is a big one.
ADX
Average Directional Index (0–100). Above 25 = trending, below 20 = ranging. Tells you whether to use a trend or mean-reversion strategy.
Advanced — Confirmation & filters
Multi-timeframe
Trade in the direction of the higher timeframe (4h/1d) and use the lower (15m/1h) for entry timing. Higher TF is the boss.
Divergence
When price makes a new high but RSI/MACD does not = bearish divergence (weakening momentum). Often precedes a reversal.
Confluence
A single indicator is noise. Three agreeing indicators (trend + momentum + level) is a signal. Confluence filters out false entries.
Overfitting
Adding 15 indicators to fit past data destroys future performance. Fewer, well-understood indicators beat complex ones.
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