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Category: Exploring Technical Indicators

Volume Indicators and Strategies for Traders

Most traders have seen stocks that have soared 1,000% or even 10,000% in a given day, but we quickly skim past them and move on to other opportunities. The reason is simple: These huge gains occur on penny stocks that have almost no volume, and without volume, there’s little to no opportunity to profit.

Beyond providing context to the price, volume can be used to gauge the market’s interest in a security both in the moment and over time, making it a powerful technical indicator to understand.

Let’s take a look at how traders can use volume to improve their performance — including in some unexpected ways.

A Practical Guide to Screening for and Trading Bullish Divergences

Most traders are familiar with oscillators, such as the relative strength index (RSI) or moving average convergence-divergence (MACD), but they may not realize that there’s more to them than waiting for them to reach the extremes.

It’s true that the RSI or MACD can alert you to overbought or oversold conditions, but the real insights come when comparing their trend to the overall price trend. These comparisons can uncover subtle changes in momentum, known as divergences, that often precede a larger trend change.

Let’s take a look at how to screen for and trade bullish divergences and boost your trading performance.

How to Use Moving Averages to Improve Your Trading

Most traders learn about moving averages when they first study technical analysis, but quickly abandon them as they learn about other more complex technical indicators. There’s a perception among some traders that successful trading systems need to be complex in order to be successful.

These perceptions aren’t exactly true. While a moving average crossover strategy won’t work for every security, simple strategies can be effective specific securities with the right settings. Moving averages can also be incorporated into more complex trading systems using other technical indicators.

Let’s take a closer look at moving averages and how traders at any skill level can use them to improve their performance.

The Ultimate Guide to Technical Indicators

Most people that see technical indicators for the first time feel a bit overwhelmed by all of the lines and numbers. It’s a lot like showing an equation containing a sigma symbol (Σ) to a fifth grader — it might make sense when it’s explained to them, but until then, it looks impossible to understand.

Technical indicators are indispensable tools for analyzing historical market data and predicting prices. Since they’re quantitative in nature, they can generate clear buy and sell signals without subjective analysis. They can also be easily incorporated into automated trading systems.

Let’s take a look at different types of technical indicators, some of the most common indicators, and how to use them to increase your risk-adjusted returns.