What indicators really help in trading? A practical guide

There is no universal indicator — everyone looks at different things. But there is a classification that helps not to get lost in the diversity of tools.

Defining the Direction: Trend Indicators

The first thing to understand is which direction the market is moving. This helps:

Moving Averages (MA)

• SMA simply averages the price over a period
• EMA pays more attention to fresh data
• When the short MA crosses the long one — this is a signal

ADX (Average Directional Index)

• ADX > 25 = trend exists and it is strong
• ADX < 20 = the market is moving sideways

Parabolic SAR

• Shows potential reversal points directly on the chart

Catching Overbought/Oversold: Momentum Indicators

This is about the speed of price movement:

RSI (Relative Strength Index)

• 0-100 scale
• RSI > 70 = likely overbought, a correction may occur
• RSI < 30 = oversold, a rebound may occur

Stochastic

• 80 = bought out

• < 20 = resold

MACD

• We are just looking to see if the lines intersect.
• Cross up = bullish signal
• Downward crossover = bearish signal

Evaluating Volatility

Bollinger Bands

• Price beyond the bands = high volatility
• Narrowing bands = low volatility

ATR (Average True Range)

• High ATR = the market is moving sharply
• Low ATR = calm

Analyzing volumes

The volume shows how serious the participants are:

OBV (volume considering balance)

• The volume is increasing = there is real pressure from buyers/sellers

VWAP (volume-weighted average price)

• Average price, but taking into account how much was bought at each level

Support and Resistance

Fibonacci

• Levels 38.2%, 61.8% often work
• Not magic, but statistics

Ishimoku Cloud

• A comprehensive tool that shows both support and trend at the same time.

Market Sentiment

Fear & Greed Index

• We just look at what people feel
• 0-100 scale

How to apply all of this?

Do not rely on a single indicator. For example:

• RSI says overbought, but the price isn't falling?
• Look at the Bollinger Bands — maybe the volatility is still increasing.
• Check the volume - how serious this movement really is.

Every trader selects a combination that suits them. What works on a 4H chart may not work on minute charts. Test on your own data, don't blindly trust advice.