What Are Indicators

And Why They Matter in Trading

Trading indicators are tools that help you analyze market data to make better trading decisions. Think of them as gadgets on your trading dashboard that give you extra info about price movements, trends, and potential reversals. Indicators use math and past price data to show you patterns and signals that aren’t always obvious just by looking at the charts.

Why Indicators Are Important

1. Spotting trends. Indicators like Moving Averages help you see the direction the market is moving. Are prices going up, down, or sideways? Knowing the trend helps you decide whether to go long or short.

2. Timing your trades. Indicators such as RSI or MACD can signal the best times to enter or exit a trade. They help you avoid jumping in too early or staying too long.

3. Managing risk. By using indicators to set stop-loss levels or identify support and resistance, you can protect your trades from unexpected moves.

4. Confirming signals. Indicators can back up what you see on the charts. If a pattern suggests a move, an indicator can confirm it, giving you more confidence in your decision.

On the next page we will look at 4 types of indicators on trading platforms, and do the first practical exercise.