Popular Intraday Trading Indicators & How to Use Them

Intraday Trading Indicators to Simplify Trading

Be it a beginner or a professional, following the basic intraday trading tips is a common practice before starting online share trading. Intraday trading involves the buying and selling of stocks on the same day. Here, traders do not purchase shares with an intent of investing, but to earn profits with the help of fluctuating stock indices. Though it may sound quite fascinating, it is quite riskier as compared to the regular stock market. Thus, it becomes essential, especially for beginners, to understand the basics to avoid losses. Intraday trading indicators help to maximise returns and help understand the market better.

How do trading indictors help?

Trading indicators are tools which are used as a comprehensive guide to earn more gains. These tools help the traders make a better and informed decision. Intraday indicators help to provide the following information:

  1. The direction in which the trend is moving
  2. If there is any momentum present in the investment market
  3. Profit potentiality due to volatility in the share market
  4. Determining popularity with the help of volume measurements

Useful Trading Indicators:

Following are some of the best indicators for intraday trading that you might consider to use for some excellent share trading tips:

1. Moving Averages

Moving averages is one of the most commonly used intraday trading indicators amongst intraday traders. In this method, the average closing rates are placed on a line on the stock chart over a specific period. Usually, the longer the period of the stock movement, the more reliable is the moving averages. This indicator helps a trader apprehend the price movement of the stock, as stocks are volatile.

2. Bollinger Bands

Bollinger Bands are an advancement to moving averages. In this method, the average closing rates, an upper limit and a lower limit are placed on 3 different lines on the stock chart over a specific period. These bands represent the stock’s standard deviation, i.e., the amount of increase or decrease of the price from its average.

3. Momentum Oscillators

Since the stock market is very volatile, the prices constantly move up and down. There are instances when the stock market experiences a short-period cycle, in spite of the market not being bearish or bullish. A momentum oscillator helps traders to identify such scenarios. It helps to apprehend if the market sentiments are undergoing any modifications.

4. Relative Strength Index (RSI)

A trader uses the RSI indicator when he/she wants to compare the share price’s gains and losses. This information is then tabulated in an index form, with the RSI score ranging from 0 to 100. Usually, analysts tend to recommend traders to buy when the RSI reaches 70 and to sell when it reaches 30. Of course, not all stocks follow this pattern, so it is always suggested to do your research in advance.

5) Moving Average Convergence Divergence (MACD)

Momentum traders consider MACD as one of the most reliable and best indicators for intraday trading. This indicator provides information on trend direction, momentum, and duration. The MACD indicator is based on the convergence and divergence of two moving averages. A positive value of MACD means upward trend, whereas a negative value indicates a negative trend.

If you are still unsure about how to trade in the intraday markets, fret not. Indiabulls Securities is there to help you out in every possible manner. Indiabulls Shubh is a discount broking platform that offers subscription based plans for zero brokerage in intraday trading.

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