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General Concepts of Indicators

Using multiple indicators for trading signals

Price-sensitive techniques

Moving Averages - Gives the general trend of price based on its recent behavior and tells when the trend has been broken.

Relative Strength - Measures the strength left in a price trend by comparing number of up and down days over a recent timeframe.

Percentage R - This compares a day’s closing price to a recent range of prices to determine if a market is overbought or oversold.

Oscillators - Measure the momentum of a price trend based on recent price behavior.

Stochastic - Combines indicators like moving average and relative strength to measure overbought and oversold tendencies.

Point-and-Figure/ kagi - Plots trends and reversals in price movement and then gives buy/ sell signals based on recognizable patterns.

Basic Charting - Techniques for recognizing common price movement patterns and gaugingmarket movements.

Swing Charting - Provides rigid entry and exit signals based on recent price history.

Volume-sensitive techniques

Tic Volume - This is similar to On-Balance Volume, but looks at the volume and directions of individual trades.

On-Balance Volume - Discovers “smart money’s” moves by balancing the volume of days with rising prices against falling days.

Composite methods

Elliott Waive - Uses rules of cyclic market behavior and pattern formations to predict future price levels, trends, and reversal points.

How to use the tool kit of trading techniques

Price-sensitive techniques

Moving Averages - Gives very good signals in a trending market, but can reduce profits in a trading market.

Relative Strength - This confirms other methods in trading markets. Users have to keep adjusting the scale in trending markets.

Oscillators - Can confirm other techniques and indicate whether market is overbought or oversold and should be sold or bought.

Stochastic - Accurate for predicting trading market lows and highs.

Point-and-Figure - Gives acceptable results most of the time, but can be unreliable in strongly trending markers.

Basic Charting - Gives general framework for interpreting most other techniques. Volume analysis is an offshoot of basic charting.

Swing Charting - Works in trending markets. Combine longer and shorter period charts to avoid choppiness in trading markets.

Nifty Chart Showing RSI and Stochastic Nifty Chart Showing RSI and Stochastic Indicators

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