It is important to know the effective
day trading indicators because it may help you to gain more profits. That is why; traders must open their mind and add more knowledge about that.
With dozens of day trading indicators out there, it certainly makes traders, especially beginners, so confused choosing and studying them one by one.
Trading activities will certainly be more efficient if you already understand what indicators are effective, right? Then, what are the 3 day trading indicators which are effective?
Effective Day Trading Indicators
Don't worry, these three are popular indicators that are definitely familiar. Those are the Donchian Canal, the Moving Average, and the Stochastic Oscillator.
Of the many indicators, why these three are considered as the most effective aspects for day trading? Below is the further explanation about that.
1. Donchian Canal
The Donchian channel was created by a trend-follower, Richard Donchian, in the mid-20th century to help him identify trends. The Donchian Canal consists of three lines.
Those are generated by the calculation of the Moving Average, each as the upper band, the lower band, as well as the middle band or median line. The upper band marks the highest price during a period.
Meanwhile, the lower band marks the lowest. This area between the upper and lower bands is called the Donchian Canal. This channel is very useful for day traders to keep an eye on short-frame charts. The example is 1 minute, 5 minutes, or 1 hour.
2. Moving Average
The next effective day trading indicators are about moving average. Moving Average is a simple technical analysis tool, and is usually the first day trading strategy that beginner traders learn.
Moving Averages are used to identify the direction of a currency's price trend or determine dynamic Support or Resistance levels. It settings can be customized as needed.
That is why; you are free to choose any time period, whether 15-period, 20-period, even up to 200-period. The shorter the time span used, the more sensitive it will be to price changes, and vice versa.
The longer the time period of the Moving Average, the greater the lagging. So, the 200-period Moving Average certainly has a much larger lagging rate than the 20-period.
The reason is tgat it contains price information for the last 200 days. That is why; it is considered as one of the effective day trading indicators for beginners.
3. Stochastic Oscillator
Created by George C. Lane in the late 1950s, the Stochastic Oscillator is a popular indicator for predicting trend reversals. Because it focuses on momentum, Stochastic is also useful in identifying overbought and oversold levels.
It is especially in forex, stocks, indices, as well as other trading instruments. The Stochastic indicator can be used by both professional and novice traders.
With the help of tools such as Moving Averages, trend lines, or Support-Resistance levels, Stochastic can help improve trading accuracy in finding accurate entry and exit points. Just like the Moving Average, you can also customize the settings of this one of the day trading indicators as needed.
Combination of Those 3 Indicators
Many professional traders said that combining some indicators can be great. The examples are MACD with Stochastic, stochastic and rsi, etc. However, holy grail strategy is actually doesn’t exist.
It means that the risk is always there. That is why; it is better to use the service from the
best forex broker to press that risk and gain more profits. Didimax is a great broker that is recommended.
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