WHAT IS 'Unique Indicator'

A unique indicator is a type of technical indicator, and is sometimes used interchangeably to mean technical indicator.

BREAKING DOWN 'Unique Indicator'

A unique indicator can be developed using only core elements of chart analysis, unlike hybrid indicators, which are developed using technical indicators and fundamental indicators and pairing them with external constants. 

A unique indicator is an indicator developed by utilizing elements of chart analysis, such as patterns and mathematical functions. This is a type of technical indicator; a technical indicator is an indicator which depends on the movement and historical performance of the security to make predictions about future performance. Unique indicators are simply indicators developed using one way of measuring or assessing a security's performance, sometimes referred to as "chart pattern" because the performance shows up visually on a chart of the pricing changes.

Some unique indicators include triangles, a head-and-shoulders pattern, moving averages and Bollinger Bands®​​​​​​​. Traders and analysts can use these patterns to analyze performance and predict future performance.

Unique Indicators vs Hybrid Indicators

Unique indicators, or technical indicators, are effective at conveying a very narrow set of information and conclusions about a chart pattern. They are relatively simple to calculate, and for a long period of time were the limits of analysis and were thought to be adequate. Unique indicators are quite accurate in a vacuum or if conditions are the same as they have been previously. They provide a good set of guidelines for general behavior, giving traders and analysts rules for when to buy or sell based on where the price is in one of these familiar patterns. However, it is difficult to understand, let alone predict, what the price of a security will do without taking into account external conditions, general rules, the market as a whole and any number of other situations that simply cannot be addressed by unique indicators.

Hybrid indicators combine at least one unique indicator with another kind of indicator, from fundamental indicators to advanced indicators based in artificial neural network modeling. This makes hybrid indicators incredibly complicated, and these calculations and analyses could not have been performed before advanced computing allowed them to be. These hybrid calculations are radically more accurate in predicting behavior of securities than unique indicators can be, but they are also more difficult to interpret and understand. Any good trader or reasonably experienced analyst can use unique indicators to make decisions about trading into or out of a position, but hybrid indicators require more analysis. Despite this, their accuracy makes them worth pursuing.

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