Technical analysis indicators, or computer indicators, are tools that make certain calculations according to preset formulas based on price chart data, and then automatically produce results. Most indicators are graphical drawings (lines, histograms, etc.) which are automatically plotted on a chart. Each indicator is based on a formula, where price chart values are used as variables. Some parameters can be set independently by the user. Once all parameters and values are determined, an indicator is applied to the chart and trader receives a clear signal to enter or leave the trade.
Automatism in calculations is the main feature of computer indicators. Thanks to it, the most complicated constructions can be put on the chart in a few seconds. Precisely due to the emergence of computer analysis appeared the possibility of creating automatic trading systems, various advisors and robots.
There are several categories of technical analysis indicators that are used to trade. Instruments of each category perform a specific function.
In order to choose a really effective indicator, you need to ask yourself, what moves the price? Because only if you know that will you understand which indicator you should use, and which should not be used, because they can ruin your trading.
The price moves because people make transactions, they open and close positions. It follows that it is much better to use indicators based on people’s transactions. Ask yourself: do you know the MACD or RSI formula? Probably not, so you do not understand how this indicator works.
Professional traders at Bikotrading Academy do not use these indicators. They prefer to use Volume, Footprint, Order flow and technical analysis.
How Volume indicators look on Tradingview
How Footprint and Order flow looks on Tiger Trade platform
In general, volume indicators help determine the interest of investors in a particular asset, as well as understand whether the price change is caused by the real interest of investors or solely speculative manipulation. The most popular and basic indicator is rightfully considered to be. More than half of strategies using indicators also include MA.
The Footprint indicator makes it possible to see the accumulation of volume within a candle, based on exchange data. The accumulation and distribution of volume allows you to assess the current trend in the market, as well as to predict the behavior of market participants.
The Order Flow indicator shows the ratio of buy and sell orders executed on the interbank market by all participants capable of determining the price movement. For maximum accuracy, it uses a unique method of calculating levels based on tick volume.