InvestorQ : InvestorQ-Ask,Answer & Share All About Finance!
shrinidhi Rajan made post

What are some of the popular trading indicators that are applied in this case of intraday trading?

Answer
user profile image
Priyanka Jain answered.
2 years ago


The most common indicators for intraday trading are the moving averages. They are the simplest and most effective indicators of break-in trends. You have simple moving averages and also exponential moving averages for a more granular picture. Measures like the 50-DMA, 100-DMA, and the 200-DMA capture the trend and the shifts in trend. Normally, the DMA is charted over a longer period of time to get reliable information.

Relative strength index (RSI) is another popular measure in intraday trade charting. How do you apply this measure? The RSI score varies between 0 and 100 which shows you the strength of the trend. This method is used to compare the share price gains and losses and is one of the most popular indices used by intraday traders. You normally buy at RSI of 30 and sell at RSI of 70. Again, all these are very generic values and you need to consult with your charts for actual decisions.

A slight improvement over the moving averages is the Bollinger Bands which is again used quite frequently by intraday traders. The Bollinger Bands are indicative of the upper and lower bands of the stock price and enable the intraday trade to decide at what price to buy and at what price to sell so as to maximize the chances of being profitable.

Another very important measure is the momentum oscillators. These momentum oscillators also range between 0 and 100 and show the extent and the intensity of the momentum of the stock. Normally, trends get confirmed by the intensity of the movement. This is more useful when you are trying to trade a stock that is showing a trend that is divergent with the market as a whole. It helps to explain a unique trend in the stock.

Supports and resistances are not exactly indicators but they form a very important part of intraday traders charting dictionary. Intraday traders use these support and resistance levels not only to initiate trades but also to set their stop-loss levels. There are some fake supports and resistances that you need to be careful about and not fall into the trader's trap. Supports and resistances also give a strong indication when the price breaks out through these lines supported by volumes.