7 Technical Indicators to Build a Trading Toolkit

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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.

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