Using Indicators

Technical indicators are mathematical calculations based on price, volume, or open interest. This tutorial covers the most popular indicators, how to configure them, and when to use each type effectively.

Types of Indicators

Trend Indicators

Show the direction and strength of trends.

Momentum Indicators

Measure the speed of price changes.

Volatility Indicators

Measure market volatility and potential range.

Volume Indicators

Analyse trading volume for confirmation.

Adding Indicators to Charts

Method 1: Indicator Menu

1. Click the Indicators button (📊) in chart toolbar
2. Search for your indicator by name
3. Click to add it to the chart
4. Indicator appears on chart or in separate panel

Method 2: Quick Search

1. Press / or click search icon
2. Type indicator name
3. Press Enter to add
4. Works for common indicators

Method 3: Favourites

1. Add frequently used indicators to favourites
2. Click star icon next to indicator name
3. Access from Favourites tab for quick addition

Configuring Indicator Settings

1. Click the settings (cog) icon on indicator
2. Adjust parameters:
   • Period/length
   • Colours
   • Display options
3. Click Apply to update

Moving Averages

Moving averages smooth price data to show trend direction.

Simple Moving Average (SMA)

Calculates average price over specified periods.

Formula:

1SMA = (P1 + P2 + P3 + ... + Pn) / n
2
3Example (5-period SMA):
4Prices: 1.1000, 1.1010, 1.1020, 1.1015, 1.1025
5SMA = (1.1000 + 1.1010 + 1.1020 + 1.1015 + 1.1025) / 5
6SMA = 1.1014

Common Periods:

• 20 SMA: Short-term trend
• 50 SMA: Medium-term trend
• 200 SMA: Long-term trend

Exponential Moving Average (EMA)

Gives more weight to recent prices.

Benefits vs. SMA:

• Responds faster to price changes
• Better for shorter timeframes
• Less lag

Common Periods:

• 9 EMA: Very short-term
• 21 EMA: Short-term
• 50 EMA: Medium-term

Moving Average Strategies

Golden Cross / Death Cross

Golden Cross (Bullish):

• 50 MA crosses above 200 MA
• Indicates potential uptrend

Death Cross (Bearish):

• 50 MA crosses below 200 MA
• Indicates potential downtrend

MA as Dynamic Support/Resistance

1. Add 50 EMA to chart
2. In uptrend, price bounces off MA (support)
3. In downtrend, price rejected by MA (resistance)
4. Look for entries when price touches MA in trend direction

Configuring Moving Averages

1. Click indicator settings
2. Set Period (e.g., 50)
3. Choose Type (SMA, EMA, WMA)
4. Select Source (close, open, high, low, hl2)
5. Set Colour and Line Width

RSI (Relative Strength Index)

RSI measures momentum on a scale of 0-100.

Understanding RSI

RSI = 100 - (100 / (1 + RS))
RS = Average Gain / Average Loss

Interpretation:

RSI Trading Strategies

Overbought/Oversold

1. RSI drops below 30 → Oversold
2. Wait for RSI to cross back above 30
3. Enter long with stop below recent low

RSI Divergence

Bullish Divergence:

• Price makes lower low
• RSI makes higher low
• Indicates weakening selling pressure

Bearish Divergence:

• Price makes higher high
• RSI makes lower high
• Indicates weakening buying pressure

1Price:    ╱╲    ╱╲
2         ╱  ╲  ╱  ╲ (Higher high)
3RSI:     ╱╲    ╱╲
4        ╱  ╲  ╱  ╲ (Lower high)
5
6= Bearish Divergence → Potential reversal down

RSI Configuration

• Period: 14 (default) - Lower for more signals, higher for fewer
• Overbought: 70 (or 80 for stronger trends)
• Oversold: 30 (or 20 for stronger trends)

MACD (Moving Average Convergence Divergence)

MACD shows trend direction and momentum through moving average relationships.

MACD Components

1. MACD Line: 12 EMA - 26 EMA
2. Signal Line: 9 EMA of MACD Line
3. Histogram: MACD Line - Signal Line

MACD Line (blue):  ────────╱╲────────
Signal Line (red): ─────╱╲────╲─────
Histogram:         ▓▓▓▓▓▓▓▓▓░░░░░░░░░
                   + area   - area

MACD Signals

Signal Line Crossover

Bullish:

• MACD crosses above Signal line
• Histogram turns positive

Bearish:

• MACD crosses below Signal line
• Histogram turns negative

Zero Line Crossover

Bullish:

• MACD crosses above zero
• Confirms uptrend

Bearish:

• MACD crosses below zero
• Confirms downtrend

MACD Divergence

Same concept as RSI divergence:

• Bullish: Price lower low, MACD higher low
• Bearish: Price higher high, MACD lower high

MACD Configuration

Bollinger Bands

Bollinger Bands measure volatility with a moving average and standard deviation bands.

Band Components

Upper Band = 20 SMA + (2 × Standard Deviation)
Middle Band = 20 SMA
Lower Band = 20 SMA - (2 × Standard Deviation)

Upper Band:  ───────╱╲────╲────
Middle:      ─────────────────── (20 SMA)
Lower Band:  ────╲╱────────╱────
             (Bands expand/contract with volatility)

Bollinger Band Signals

Band Squeeze

Bands contract = low volatility = breakout imminent

1. Wait for bands to tighten significantly
2. Prepare for breakout in either direction
3. Enter on breakout with volume confirmation

Band Touch

• Upper band touch: Not necessarily sell signal in uptrend
• Lower band touch: Not necessarily buy signal in downtrend

In Range:

• Price touching upper band → Potential resistance
• Price touching lower band → Potential support

%B Indicator

Shows where price is relative to bands:

%B = (Price - Lower Band) / (Upper Band - Lower Band)

%B > 1: Above upper band
%B = 0.5: At middle band
%B < 0: Below lower band

Bollinger Bands Configuration

Stochastic Oscillator

Measures momentum by comparing closing price to price range.

Stochastic Components

%K Line (Fast):

%K = ((Close - Lowest Low) / (Highest High - Lowest Low)) × 100

%D Line (Slow): 3-period SMA of %K

Stochastic Signals

Overbought/Oversold

Crossover Signals

Bullish:

• %K crosses above %D
• Especially when in oversold zone

Bearish:

• %K crosses below %D
• Especially when in overbought zone

Stochastic Configuration

ATR (Average True Range)

ATR measures market volatility for stop loss placement.

True Range Calculation

1True Range = Max of:
2  1. Current High - Current Low
3  2. |Current High - Previous Close|
4  3. |Current Low - Previous Close|
5
6ATR = Average of True Range over N periods

Using ATR for Trading

ATR-Based Stop Loss

1Long Entry: Stop = Entry - (ATR × Multiplier)
2Short Entry: Stop = Entry + (ATR × Multiplier)
3
4Example:
5Entry: 1.1000
614-period ATR: 0.0050 (50 pips)
7Multiplier: 2
8Stop Distance: 100 pips
9Stop Loss: 0.9900

ATR for Position Sizing

Position Size = Risk Amount / (ATR × Multiplier × Pip Value)

ATR Multiplier Guide

Fibonacci Retracements

Fibonacci levels identify potential support/resistance based on previous moves.

Key Fibonacci Levels

Drawing Fibonacci Retracements

1. Select Fibonacci Retracement tool
2. Click the swing low
3. Drag to the swing high
4. Levels appear automatically

For Uptrend:

• Start at swing low, drag to swing high
• Look for bounces at 38.2%, 50%, 61.8%

For Downtrend:

• Start at swing high, drag to swing low
• Look for rejections at retracement levels

Volume Analysis

Volume confirms price movements.

Volume Interpretation

Volume Indicators

On-Balance Volume (OBV)

Running total of volume based on price direction:

• Price up: Add volume
• Price down: Subtract volume

Signals:

• Rising OBV + Rising price = Confirmed uptrend
• Falling OBV + Rising price = Bearish divergence

VWAP (Volume Weighted Average Price)

Average price weighted by volume:

VWAP = Σ(Price × Volume) / Σ(Volume)

Use:

• Price above VWAP: Bullish bias
• Price below VWAP: Bearish bias
• Often used by institutional traders

Creating Indicator Templates

Save your favourite indicator setups:

Save Template

1. Configure all your indicators
2. Click Templates in toolbar
3. Select Save as Template
4. Name your template
5. Click Save

Load Template

1. Click Templates
2. Select your saved template
3. Indicators apply to current chart

Suggested Templates

Trend Following:

• 50 EMA + 200 EMA
• MACD (12, 26, 9)
• ADX (14)

Mean Reversion:

• Bollinger Bands (20, 2)
• RSI (14)
• Stochastic (14, 3, 3)

Scalping:

• 9 EMA + 21 EMA
• RSI (7)
• ATR (14)

Indicator Best Practices

1. Don't Overload Your Chart

Problem: Too many indicators = analysis paralysis Solution: Use maximum 3-4 indicators

2. Use Different Types

Problem: Multiple trend indicators give same information Solution: Combine trend + momentum + volume

1Good Combination:
2✓ 50 EMA (trend)
3✓ RSI (momentum)
4✓ Volume (confirmation)
5
6Bad Combination:
7✗ SMA, EMA, WMA (all trend)
8✗ Redundant information

3. Understand What You're Using

Problem: Using indicators without understanding Solution: Learn the formula and logic behind each

4. Test Before Trading

Problem: Applying new indicator to live trades Solution: Backtest and forward test on demo first

5. Indicators Are Tools, Not Magic

Problem: Expecting indicators to predict the future Solution: Use for confirmation, not prediction

Indicator Checklist

Before adding an indicator, ask:

• What type of indicator is this? (trend, momentum, volatility)
• Does it add new information or duplicate existing?
• What are the default settings and should I adjust?
• How does it perform in different market conditions?
• Have I tested it on historical data?

Next Steps

Continue building your technical analysis skills:

• Reading Charts - Master chart patterns
• Setting Stop Losses - Use ATR for stops
• Managing Portfolio - Apply analysis
• Technical Analysis Guide - Advanced techniques

Need Help?

• FAQ: Technical Questions
• Trading Interface: Feature Guide
• Live Support: Click the chat widget