The Categories In Technical Indicators
If you have been active in trading you must have noticed the recent increase in the popularity of trading bots like Bitcoin Code. To know more about how these bots work and the features they offer check this out. Do you know how these bots actually work? The concept is very much similar to the way in which human traders make their decisions. While human traders pick a stock or any other asset and decide on a buy or sell opportunity they compare the results given by various technical indicators. The bots too rely on such indicators to make a decision.
When we talk about technical indicators there are plenty of them and each covers a different aspect of the asset and its growth. Here are the categories into which the common technical indicators are often segregated for the sake of convenience. So anytime you pick a set of indicators to make a trading decision it would be a good idea to pick one or more of them from each category in order to reach an unbiased conclusion.
Parabolic SAR, moving averages and moving average convergence divergence are the indicators classified as trend indicators. The first is a leading indicator while the latter is a lagging indicator. When you study these indicators you would be able to conclude about the trend (bullish and bearish) being followed and its strength.
These denote how quickly the price movements take place. In this case parameters like the closing price of the previous session and the current session are all taken into account. Relative strength index, stochastic oscillator, commodity channel index are all momentum indicators.
Standard deviation, Bollinger bands, Average true range are the common volatility indicators. In this case, the direction of the movement or the speed would not be studied but the rate of change of the price would be analyzed by comparing the price changes with the historic values. You would, however, be able to predict points where the direction is likely to change.
On balance, the volume is the most popular volume indicator beside the volume rate of change and Chaikin oscillator. Here the trend is studied not just on the basis of the price movements that occur but also the volume of the trades that take place. This would be a cumulative study that helps understand the actual causes of the price changes and thus make better predictions of the performance of the asset.