{"id":175416,"date":"2020-08-27T15:15:00","date_gmt":"2020-08-27T19:15:00","guid":{"rendered":"https:\/\/ibkrcampus.com\/trading-lessons\/using-indicators\/"},"modified":"2024-01-22T12:30:23","modified_gmt":"2024-01-22T17:30:23","slug":"using-indicators","status":"publish","type":"trading-lessons","link":"https:\/\/www.interactivebrokers.com\/campus\/trading-lessons\/using-indicators\/","title":{"rendered":"Using Indicators"},"content":{"rendered":"<h3 class=\"page-title\">Using Indicators<\/h3>\n<p>A time series derived from price data<\/p>\n<ul>\n<li>(OHLC and sometimes V)<\/li>\n<li>Might sometimes consider related markets or other data series<\/li>\n<\/ul>\n<p>Vary in complexity<\/p>\n<ul>\n<li>Difference between two closes is a simple indicator<\/li>\n<li>More complex indicators could be thousands of lines of code<\/li>\n<\/ul>\n<p>Historically, grew up with the rise in the easy availability of computing power<\/p>\n<ul>\n<li>At one time, calculating a moving average was a chore!<\/li>\n<\/ul>\n<h3>A Common Misconception<\/h3>\n<p>Many technical analysis texts (and websites) say there are leading and lagging indicators.<\/p>\n<p>This is not true! Technical indicators are all calculated from (past and current) price data, so they reflect the past.<\/p>\n<p>(There are leading economic and fundamental indicators, but there are no leading technical indicators.)<\/p>\n<p>There\u2019s always a tradeoff: If we try to make an indicator more sensitive to recent data it will also provide more false signals.<\/p>\n<p>There are no leading technical indicators.<\/p>\n<h3>Guidelines for Using Indicators<\/h3>\n<p>Understand the calculation and tool you are using.<\/p>\n<ul>\n<li>Maybe should be able to do it by hand?<\/li>\n<li>At least have that degree of understanding.<\/li>\n<li>Names for indicators can be imprecise and misleading<\/li>\n<\/ul>\n<p>Understand what it shows and what its quirks are.<\/p>\n<p>If you combine indicators, be careful of overlap.<\/p>\n<h3>Categories of Indicators<\/h3>\n<h4>Trend<\/h4>\n<ul>\n<li>Moving Averages<\/li>\n<li>MACD<\/li>\n<li>Parabolic SAR<\/li>\n<li>ADX<\/li>\n<\/ul>\n<h4>Momentum Indicators<\/h4>\n<ul>\n<li>RSI<\/li>\n<li>Stochastic<\/li>\n<li>Williams %R<\/li>\n<li>CCI<\/li>\n<\/ul>\n<h4>Volatility<\/h4>\n<ul>\n<li>ATR<\/li>\n<li>Historical Volatility<\/li>\n<\/ul>\n<h3>Different Ways to Measure<\/h3>\n<h4>Bounded (Oscillators)<\/h4>\n<ol>\n<li>Chaikin Oscillator<\/li>\n<li>Williams %R<\/li>\n<li>Stochastic<\/li>\n<li>RSI<\/li>\n<\/ol>\n<h4>Unbounded<\/h4>\n<ul>\n<li>Momentum<\/li>\n<li>Rate of Change<\/li>\n<li>MACD<\/li>\n<\/ul>\n<h3>Using Line Crossings as a Signal<\/h3>\n<p><img decoding=\"async\" class=\"alignnone size-medium wp-image-1842 lazyload\" data-src=\"\/campus\/wp-content\/uploads\/sites\/2\/2023\/01\/using-line-crossing-signal-scaled.jpg\" alt=\"\" width=\"813\" height=\"540\" src=\"data:image\/svg+xml;base64,PHN2ZyB3aWR0aD0iMSIgaGVpZ2h0PSIxIiB4bWxucz0iaHR0cDovL3d3dy53My5vcmcvMjAwMC9zdmciPjwvc3ZnPg==\" style=\"--smush-placeholder-width: 813px; aspect-ratio: 813\/540;\"><\/p>\n<h3>Using Indicator for OB\/OS<\/h3>\n<p><img decoding=\"async\" class=\"alignnone size-medium wp-image-1841 lazyload\" data-src=\"\/campus\/wp-content\/uploads\/sites\/2\/2023\/01\/using-indicator-ob-os-scaled.jpg\" alt=\"\" width=\"808\" height=\"540\" src=\"data:image\/svg+xml;base64,PHN2ZyB3aWR0aD0iMSIgaGVpZ2h0PSIxIiB4bWxucz0iaHR0cDovL3d3dy53My5vcmcvMjAwMC9zdmciPjwvc3ZnPg==\" style=\"--smush-placeholder-width: 808px; aspect-ratio: 808\/540;\"><\/p>\n<h3>Divergence<\/h3>\n<p><img decoding=\"async\" class=\"alignnone size-medium wp-image-1840 lazyload\" data-src=\"\/campus\/wp-content\/uploads\/sites\/2\/2023\/01\/divergance-scaled.jpg\" alt=\"\" width=\"808\" height=\"540\" src=\"data:image\/svg+xml;base64,PHN2ZyB3aWR0aD0iMSIgaGVpZ2h0PSIxIiB4bWxucz0iaHR0cDovL3d3dy53My5vcmcvMjAwMC9zdmciPjwvc3ZnPg==\" style=\"--smush-placeholder-width: 808px; aspect-ratio: 808\/540;\"><\/p>\n<h3>Much More Is Possible<\/h3>\n<p>Can combine indicators<\/p>\n<p>Can take indicator signals as entries, exits, or input to other stages of your process.<\/p>\n<p>Indicators may be adaptive or adapted to cycles in the market.<\/p>\n<p>Indicators may be calculated on other indicators!<\/p>\n<ul>\n<li>RSI of MACD, for instance<\/li>\n<\/ul>\n<p>Understand what you\u2019re trying to accomplish and what the indicator measures.<\/p>\n<h3>Summary<\/h3>\n<p>Indicators are calculated from OHLCV (and possibly OI) data.<\/p>\n<p>They are usually visual presentations of processed price data.<\/p>\n<p>Understand how the indicator you choose is calculated and what it measures.<\/p>\n","protected":false},"excerpt":{"rendered":"<p>In this unit we\u2019re going to talk about indicators. What are indicators? What can they do? Also, very importantly, what can they not do? We&#8217;re going to look at some common indicators, such as MACD, ADX, RSI, Stochastic and think about some ways that we might use them.<\/p>\n","protected":false},"author":899,"featured_media":221507,"parent":0,"comment_status":"open","ping_status":"closed","template":"","meta":{"_acf_changed":false,"footnotes":""},"contributors-categories":[13612],"traders-academy":[13125,13128,13132],"class_list":{"0":"post-175416","1":"trading-lessons","2":"type-trading-lessons","3":"status-publish","4":"has-post-thumbnail","6":"contributors-categories-marketlife","7":"traders-academy-beginner-trading","8":"traders-academy-level","9":"traders-academy-trading-lesson"},"pp_statuses_selecting_workflow":false,"pp_workflow_action":"current","pp_status_selection":"publish","acf":[],"yoast_head":"<!-- This site is optimized with the Yoast SEO Premium plugin v26.9 (Yoast SEO v27.3) - https:\/\/yoast.com\/product\/yoast-seo-premium-wordpress\/ -->\n<title>Archives | Traders&#039; Academy | IBKR Campus<\/title>\n<meta name=\"description\" content=\"We&#039;re going to look at some common indicators, such as MACD, ADX, RSI, Stochastic and think about some ways that we might use them.\" \/>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/www.interactivebrokers.com\/campus\/wp-json\/wp\/v2\/trading-lessons\/175416\/\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"Using Indicators\" \/>\n<meta property=\"og:description\" content=\"We&#039;re going to look at some common indicators, such as MACD, ADX, RSI, Stochastic and think about some ways that we might use them.\" \/>\n<meta property=\"og:url\" content=\"https:\/\/www.interactivebrokers.com\/campus\/trading-lessons\/using-indicators\/\" \/>\n<meta property=\"og:site_name\" content=\"IBKR Campus US\" \/>\n<meta property=\"article:modified_time\" content=\"2024-01-22T17:30:23+00:00\" \/>\n<meta name=\"twitter:card\" content=\"summary_large_image\" \/>\n<meta name=\"twitter:title\" content=\"Using Indicators\" \/>\n<meta name=\"twitter:label1\" content=\"Est. reading time\" \/>\n\t<meta name=\"twitter:data1\" content=\"3 minutes\" \/>\n<script type=\"application\/ld+json\" class=\"yoast-schema-graph\">{\n\t    \"@context\": \"https:\\\/\\\/schema.org\",\n\t    \"@graph\": [\n\t        {\n\t            \"@type\": \"WebPage\",\n\t            \"@id\": \"https:\\\/\\\/www.interactivebrokers.com\\\/campus\\\/trading-lessons\\\/using-indicators\\\/\",\n\t            \"url\": \"https:\\\/\\\/www.interactivebrokers.com\\\/campus\\\/trading-lessons\\\/using-indicators\\\/\",\n\t            \"name\": \"Using Indicators\",\n\t            \"isPartOf\": {\n\t                \"@id\": \"https:\\\/\\\/ibkrcampus.com\\\/campus\\\/#website\"\n\t            },\n\t            \"primaryImageOfPage\": {\n\t                \"@id\": \"https:\\\/\\\/www.interactivebrokers.com\\\/campus\\\/trading-lessons\\\/using-indicators\\\/#primaryimage\"\n\t            },\n\t            \"image\": {\n\t                \"@id\": \"https:\\\/\\\/www.interactivebrokers.com\\\/campus\\\/trading-lessons\\\/using-indicators\\\/#primaryimage\"\n\t            },\n\t            \"thumbnailUrl\": \"https:\\\/\\\/www.interactivebrokers.com\\\/campus\\\/wp-content\\\/uploads\\\/sites\\\/2\\\/2020\\\/08\\\/mqdefault-21.jpg\",\n\t            \"datePublished\": \"2020-08-27T19:15:00+00:00\",\n\t            \"dateModified\": \"2024-01-22T17:30:23+00:00\",\n\t            \"description\": \"We're going to look at some common indicators, such as MACD, ADX, RSI, Stochastic and think about some ways that we might use them.\",\n\t            \"breadcrumb\": {\n\t                \"@id\": \"https:\\\/\\\/www.interactivebrokers.com\\\/campus\\\/trading-lessons\\\/using-indicators\\\/#breadcrumb\"\n\t            },\n\t            \"inLanguage\": \"en-US\",\n\t            \"potentialAction\": [\n\t                {\n\t                    \"@type\": \"ReadAction\",\n\t                    \"target\": [\n\t                        \"https:\\\/\\\/www.interactivebrokers.com\\\/campus\\\/trading-lessons\\\/using-indicators\\\/\"\n\t                    ]\n\t                }\n\t            ]\n\t        },\n\t        {\n\t            \"@type\": \"ImageObject\",\n\t            \"inLanguage\": \"en-US\",\n\t            \"@id\": \"https:\\\/\\\/www.interactivebrokers.com\\\/campus\\\/trading-lessons\\\/using-indicators\\\/#primaryimage\",\n\t            \"url\": \"https:\\\/\\\/www.interactivebrokers.com\\\/campus\\\/wp-content\\\/uploads\\\/sites\\\/2\\\/2020\\\/08\\\/mqdefault-21.jpg\",\n\t            \"contentUrl\": \"https:\\\/\\\/www.interactivebrokers.com\\\/campus\\\/wp-content\\\/uploads\\\/sites\\\/2\\\/2020\\\/08\\\/mqdefault-21.jpg\",\n\t            \"width\": 320,\n\t            \"height\": 180,\n\t            \"caption\": \"Using Indicators\"\n\t        },\n\t        {\n\t            \"@type\": \"BreadcrumbList\",\n\t            \"@id\": \"https:\\\/\\\/www.interactivebrokers.com\\\/campus\\\/trading-lessons\\\/using-indicators\\\/#breadcrumb\",\n\t            \"itemListElement\": [\n\t                {\n\t                    \"@type\": \"ListItem\",\n\t                    \"position\": 1,\n\t                    \"name\": \"Academy Lessons\",\n\t                    \"item\": \"https:\\\/\\\/ibkrcampus.com\\\/campus\\\/trading-lessons\\\/\"\n\t                },\n\t                {\n\t                    \"@type\": \"ListItem\",\n\t                    \"position\": 2,\n\t                    \"name\": \"Using Indicators\"\n\t                }\n\t            ]\n\t        },\n\t        {\n\t            \"@type\": \"WebSite\",\n\t            \"@id\": \"https:\\\/\\\/ibkrcampus.com\\\/campus\\\/#website\",\n\t            \"url\": \"https:\\\/\\\/ibkrcampus.com\\\/campus\\\/\",\n\t            \"name\": \"IBKR Campus US\",\n\t            \"description\": \"Financial Education from Interactive Brokers\",\n\t            \"publisher\": {\n\t                \"@id\": \"https:\\\/\\\/ibkrcampus.com\\\/campus\\\/#organization\"\n\t            },\n\t            \"potentialAction\": [\n\t                {\n\t                    \"@type\": \"SearchAction\",\n\t                    \"target\": {\n\t                        \"@type\": \"EntryPoint\",\n\t                        \"urlTemplate\": \"https:\\\/\\\/ibkrcampus.com\\\/campus\\\/?s={search_term_string}\"\n\t                    },\n\t                    \"query-input\": {\n\t                        \"@type\": \"PropertyValueSpecification\",\n\t                        \"valueRequired\": true,\n\t                        \"valueName\": \"search_term_string\"\n\t                    }\n\t                }\n\t            ],\n\t            \"inLanguage\": \"en-US\"\n\t        },\n\t        {\n\t            \"@type\": \"Organization\",\n\t            \"@id\": \"https:\\\/\\\/ibkrcampus.com\\\/campus\\\/#organization\",\n\t            \"name\": \"Interactive Brokers\",\n\t            \"alternateName\": \"IBKR\",\n\t            \"url\": \"https:\\\/\\\/ibkrcampus.com\\\/campus\\\/\",\n\t            \"logo\": {\n\t                \"@type\": \"ImageObject\",\n\t                \"inLanguage\": \"en-US\",\n\t                \"@id\": \"https:\\\/\\\/ibkrcampus.com\\\/campus\\\/#\\\/schema\\\/logo\\\/image\\\/\",\n\t                \"url\": \"https:\\\/\\\/www.interactivebrokers.com\\\/campus\\\/wp-content\\\/uploads\\\/sites\\\/2\\\/2024\\\/05\\\/ibkr-campus-logo.jpg\",\n\t                \"contentUrl\": \"https:\\\/\\\/www.interactivebrokers.com\\\/campus\\\/wp-content\\\/uploads\\\/sites\\\/2\\\/2024\\\/05\\\/ibkr-campus-logo.jpg\",\n\t                \"width\": 669,\n\t                \"height\": 669,\n\t                \"caption\": \"Interactive Brokers\"\n\t            },\n\t            \"image\": {\n\t                \"@id\": \"https:\\\/\\\/ibkrcampus.com\\\/campus\\\/#\\\/schema\\\/logo\\\/image\\\/\"\n\t            },\n\t            \"publishingPrinciples\": \"https:\\\/\\\/www.interactivebrokers.com\\\/campus\\\/about-ibkr-campus\\\/\",\n\t            \"ethicsPolicy\": \"https:\\\/\\\/www.interactivebrokers.com\\\/campus\\\/cyber-security-notice\\\/\"\n\t        }\n\t    ]\n\t}<\/script>\n<!-- \/ Yoast SEO Premium plugin. -->","yoast_head_json":{"title":"Archives | Traders' Academy | IBKR Campus","description":"We're going to look at some common indicators, such as MACD, ADX, RSI, Stochastic and think about some ways that we might use them.","robots":{"index":"index","follow":"follow","max-snippet":"max-snippet:-1","max-image-preview":"max-image-preview:large","max-video-preview":"max-video-preview:-1"},"canonical":"https:\/\/www.interactivebrokers.com\/campus\/wp-json\/wp\/v2\/trading-lessons\/175416\/","og_locale":"en_US","og_type":"article","og_title":"Using Indicators","og_description":"We're going to look at some common indicators, such as MACD, ADX, RSI, Stochastic and think about some ways that we might use them.","og_url":"https:\/\/www.interactivebrokers.com\/campus\/trading-lessons\/using-indicators\/","og_site_name":"IBKR Campus US","article_modified_time":"2024-01-22T17:30:23+00:00","twitter_card":"summary_large_image","twitter_title":"Using Indicators","twitter_misc":{"Est. reading time":"3 minutes"},"schema":{"@context":"https:\/\/schema.org","@graph":[{"@type":"WebPage","@id":"https:\/\/www.interactivebrokers.com\/campus\/trading-lessons\/using-indicators\/","url":"https:\/\/www.interactivebrokers.com\/campus\/trading-lessons\/using-indicators\/","name":"Using Indicators","isPartOf":{"@id":"https:\/\/ibkrcampus.com\/campus\/#website"},"primaryImageOfPage":{"@id":"https:\/\/www.interactivebrokers.com\/campus\/trading-lessons\/using-indicators\/#primaryimage"},"image":{"@id":"https:\/\/www.interactivebrokers.com\/campus\/trading-lessons\/using-indicators\/#primaryimage"},"thumbnailUrl":"https:\/\/www.interactivebrokers.com\/campus\/wp-content\/uploads\/sites\/2\/2020\/08\/mqdefault-21.jpg","datePublished":"2020-08-27T19:15:00+00:00","dateModified":"2024-01-22T17:30:23+00:00","description":"We're going to look at some common indicators, such as MACD, ADX, RSI, Stochastic and think about some ways that we might use them.","breadcrumb":{"@id":"https:\/\/www.interactivebrokers.com\/campus\/trading-lessons\/using-indicators\/#breadcrumb"},"inLanguage":"en-US","potentialAction":[{"@type":"ReadAction","target":["https:\/\/www.interactivebrokers.com\/campus\/trading-lessons\/using-indicators\/"]}]},{"@type":"ImageObject","inLanguage":"en-US","@id":"https:\/\/www.interactivebrokers.com\/campus\/trading-lessons\/using-indicators\/#primaryimage","url":"https:\/\/www.interactivebrokers.com\/campus\/wp-content\/uploads\/sites\/2\/2020\/08\/mqdefault-21.jpg","contentUrl":"https:\/\/www.interactivebrokers.com\/campus\/wp-content\/uploads\/sites\/2\/2020\/08\/mqdefault-21.jpg","width":320,"height":180,"caption":"Using Indicators"},{"@type":"BreadcrumbList","@id":"https:\/\/www.interactivebrokers.com\/campus\/trading-lessons\/using-indicators\/#breadcrumb","itemListElement":[{"@type":"ListItem","position":1,"name":"Academy Lessons","item":"https:\/\/ibkrcampus.com\/campus\/trading-lessons\/"},{"@type":"ListItem","position":2,"name":"Using Indicators"}]},{"@type":"WebSite","@id":"https:\/\/ibkrcampus.com\/campus\/#website","url":"https:\/\/ibkrcampus.com\/campus\/","name":"IBKR Campus US","description":"Financial Education from Interactive Brokers","publisher":{"@id":"https:\/\/ibkrcampus.com\/campus\/#organization"},"potentialAction":[{"@type":"SearchAction","target":{"@type":"EntryPoint","urlTemplate":"https:\/\/ibkrcampus.com\/campus\/?s={search_term_string}"},"query-input":{"@type":"PropertyValueSpecification","valueRequired":true,"valueName":"search_term_string"}}],"inLanguage":"en-US"},{"@type":"Organization","@id":"https:\/\/ibkrcampus.com\/campus\/#organization","name":"Interactive Brokers","alternateName":"IBKR","url":"https:\/\/ibkrcampus.com\/campus\/","logo":{"@type":"ImageObject","inLanguage":"en-US","@id":"https:\/\/ibkrcampus.com\/campus\/#\/schema\/logo\/image\/","url":"https:\/\/www.interactivebrokers.com\/campus\/wp-content\/uploads\/sites\/2\/2024\/05\/ibkr-campus-logo.jpg","contentUrl":"https:\/\/www.interactivebrokers.com\/campus\/wp-content\/uploads\/sites\/2\/2024\/05\/ibkr-campus-logo.jpg","width":669,"height":669,"caption":"Interactive Brokers"},"image":{"@id":"https:\/\/ibkrcampus.com\/campus\/#\/schema\/logo\/image\/"},"publishingPrinciples":"https:\/\/www.interactivebrokers.com\/campus\/about-ibkr-campus\/","ethicsPolicy":"https:\/\/www.interactivebrokers.com\/campus\/cyber-security-notice\/"}]}},"_links":{"self":[{"href":"https:\/\/ibkrcampus.com\/campus\/wp-json\/wp\/v2\/trading-lessons\/175416","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/ibkrcampus.com\/campus\/wp-json\/wp\/v2\/trading-lessons"}],"about":[{"href":"https:\/\/ibkrcampus.com\/campus\/wp-json\/wp\/v2\/types\/trading-lessons"}],"author":[{"embeddable":true,"href":"https:\/\/ibkrcampus.com\/campus\/wp-json\/wp\/v2\/users\/899"}],"replies":[{"embeddable":true,"href":"https:\/\/ibkrcampus.com\/campus\/wp-json\/wp\/v2\/comments?post=175416"}],"version-history":[{"count":0,"href":"https:\/\/ibkrcampus.com\/campus\/wp-json\/wp\/v2\/trading-lessons\/175416\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/ibkrcampus.com\/campus\/wp-json\/wp\/v2\/media\/221507"}],"wp:attachment":[{"href":"https:\/\/ibkrcampus.com\/campus\/wp-json\/wp\/v2\/media?parent=175416"}],"wp:term":[{"taxonomy":"contributors-categories","embeddable":true,"href":"https:\/\/ibkrcampus.com\/campus\/wp-json\/wp\/v2\/contributors-categories?post=175416"},{"taxonomy":"traders-academy","embeddable":true,"href":"https:\/\/ibkrcampus.com\/campus\/wp-json\/wp\/v2\/traders-academy?post=175416"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}