Technical Indicator

AAA

DEFINITION of 'Technical Indicator'

Any class of metrics whose value is derived from generic price activity in a stock or asset. Technical indicators look to predict the future price levels, or simply the general price direction, of a security by looking at past patterns. Examples of common technical indicators include Relative Strength Index, Money Flow Index, Stochastics, MACD and Bollinger Bands®.

INVESTOPEDIA EXPLAINS 'Technical Indicator'

Technical indicators, collectively called "technicals", are distinguished by the fact that they do not analyze any part of the fundamental business, like earnings, revenue and profit margins. Technical indicators are used most extensively by active traders in the market, as they are designed primarily for analyzing short-term price movements. To a long-term investor, most technical indicators are of little value, as they do nothing to shed light on the underlying business. The most effective uses of technicals for a long-term investor are to help identify good entry and exit points for the stock by analyzing the long-term trend.

RELATED TERMS
  1. Trade Signal

    A sign, usually based on technical indicators, that it is a good ...
  2. Indicator

    Statistics used to measure current conditions as well as to forecast ...
  3. Moving Average Convergence Divergence ...

    A trend-following momentum indicator that shows the relationship ...
  4. Bollinger Band

    A band plotted two standard deviations away from a simple moving ...
  5. Technical Analysis

    A method of evaluating securities by analyzing statistics generated ...
  6. Relative Strength Index - RSI

    A technical momentum indicator that compares the magnitude of ...
Related Articles
  1. Support And Resistance Basics
    Active Trading Fundamentals

    Support And Resistance Basics

  2. Finding Success Where Indicators Fail
    Active Trading

    Finding Success Where Indicators Fail

  3. How To Build A Trading Indicator
    Forex Education

    How To Build A Trading Indicator

  4. 4 Types Of Indicators FX Traders Must ...
    Forex Education

    4 Types Of Indicators FX Traders Must ...

Hot Definitions
  1. Conduit Issuer

    An organization, usually a government agency, that issues municipal securities to raise capital for revenue-generating projects ...
  2. Financing Entity

    The party in a financing arrangement that provides money, property, or another asset to an intermediate entity or financed ...
  3. Hyperinflation

    Extremely rapid or out of control inflation. There is no precise numerical definition to hyperinflation. Hyperinflation is ...
  4. Gross Rate Of Return

    The total rate of return on an investment before the deduction of any fees or expenses. The gross rate of return is quoted ...
  5. Debit Spread

    Two options with different market prices that an investor trades on the same underlying security. The higher priced option ...
  6. Leading Indicator

    A measurable economic factor that changes before the economy starts to follow a particular pattern or trend. Leading indicators ...
Trading Center