7 Technical Indicators to Build a Trading Toolkit

AAA

On-Balance Volume

Technical indicators are used within technical analysis to gain insight into the supply and demand of securities.  Indicators (such as volume) confirm price movement, and the probability that a price move will continue.  The indicators can be used as a basis for trading, as they can form buy-and-sell signals. In this slideshow, we'll take you through seven common technical indicators that can help you round out your trading toolkit.

First up the on-balance volume indicator (OBV) is used to measure the positive and negative flow of volume in a security, relative to its price over time. It is a simple measure that keeps a cumulative total volume by adding or subtracting each period's volume, depending on the price movement. This measure expands on the basic volume measure by combining volume and price movement. The idea behind this indicator is that volume precedes price movement, so if a security is seeing an increasing OBV, it is a signal that volume is increasing on upward price moves. Decreases mean that the security is seeing increasing volume on down days.

  1. No results found.
Related Articles
  1. Trading

    How to Use Volume to Improve Your Trading

    Volume is a simple yet powerful way for traders and investors to increase profits and minimize risks.
  2. Trading

    Confirming Price Movements With Volume Oscillators

    Use this indicator to validate a change in price direction and moving averages.
  3. Investing

    What The Market Open Tells You

    The first few moments of trading provide a lot of information. If a trader analyzes this information, it can give a lot of insight into the market's moves for the day.
  4. Trading

    Exploring Oscillators and Indicators

    Find out how to use these technical analysis building blocks.
  5. Investing

    Using Volume Rate Of Change To Confirm Trends

    Wise traders rely on indicators that show a trend in volume, because without supportive volume, a price movement has no conviction.
  6. Trading

    Use Market Volume Data to Determine a Bottom

    Market bottoms often carve out classic volume patterns that let observant traders make fast and accurate calls.
  7. Trading

    5 Top Traded Stocks

    Microsoft and GE are two of the biggest names on this list of stocks that have a consistently high trading volume.
Hot Definitions
  1. Call Option

    An agreement that gives an investor the right (but not the obligation) to buy a stock, bond, commodity, or other instrument ...
  2. Pro-Rata

    Used to describe a proportionate allocation. A method of assigning an amount to a fraction, according to its share of the ...
  3. Private Placement

    The sale of securities to a relatively small number of select investors as a way of raising capital.
  4. AAA

    The highest possible rating assigned to the bonds of an issuer by credit rating agencies. An issuer that is rated AAA has ...
  5. Backward Integration

    A form of vertical integration that involves the purchase of suppliers. Companies will pursue backward integration when it ...
  6. Pari-passu

    A Latin phrase meaning "equal footing" that describes situations where two or more assets, securities, creditors or obligations ...
Trading Center