Types of stock market indicators

Stock market indicators are widely used by traders. They are used to predict the future price movement of stock. They are also used by traders for knowing when to enter a trade and when to exit. There are hundreds of indicators available and used by traders.
In this article, we are going to learn about the most common and widely used indicators. These indicators work most of the time but there is no guarantee that this will work always. Now without delay let's proceed further.

                                                                                      

1 BOLLINGER BAND: This indicator is used for measuring the volatility of the stock. It consists of an upper and a lower band and a simple moving average. The upper and lower band are above and below the simple moving average by a certain standard deviation. The standard deviation can be adjusted by the user. Higher the standard deviation higher the gap between the bands and the simple moving average and vice versa. Higher the volatility higher the gap between the bands and the simple moving average and vice versa. 

2 RELATIVE STRENGTH INDICATOR: This indicator is used for determining whether the stock is overbought or oversold. The RSI can be measured between 0 to 100. Usually, it is taken that when RSI is above 70 stock is overbought and when RSI is below 30 stock is oversold and it is taken for 14 days period. 

 RSI = [100/(1+RS)]

       

 RS = average gain/average loss     

                                  

3 AVERAGE TRUE RANGE: This is not an indicator but this can be used to tell you how much profit or loss you can take on a particular stock. ATR tells us about the average price of a stock move. It is calculated by taking the mean of the price movement of the stock for the past few days. Typically it is taken for the past 14 days. Price movement is calculated simply by taking the difference of high and low price.

 

4 SIMPLE MOVING AVERAGE INDICATOR: A simple moving average indicator calculates the average of the selected range of price by the number of periods. It is used to identify the trend direction and also for determining support and resistance level. It is represented by a straight line.  

5 VOLUME WEIGHTED AVERAGE PRICE: Volume weighted average price indicator is used to tell about the average price of the stock traded for the day based upon the price and volume. It is used by the traders to know when to enter and exit the position. It is typically represented by the line similar to that of the moving average indicator. If the price is above VWAP then bearish move strength is strong. If the price is below VWAP then bullish move strength is strong. 

Indicators can tell us about various things but it is not always right to follow indicators as it is not hundred percent correct. Sometimes different indicators show different moves and sometimes one indicator can show one move while others do not show any move. It is typically recommended to use four indicators almost. 

I hope you like the above indicators. Comment other indicators that you think should I add.