Most used Intraday Trading Indicators

 

Intraday trading refers to short-term trading in which the traders take benefits of price fluctuations in the stock market and earn profits.

To be successful in the trading we need to analyse the technical charts using Price actions and Intraday trading indicators for making profits.

1.      VWAP

 VWAP- Volume Weighted Average Price. When trading intraday traders need to track the volume in the stock. VWAP is a volume indicator of the ratio of the value of a stock traded in a particular time to the total volume traded at that stock for a particular stock.

This indicator indicates a bullish trend when the price of a stock is above VWAP. This means that the price is above average volume and the trend is positive. We can enter the stock in this particular condition on a retracement to VWAP in the direction of the trend. 

Similarly, a bearish trend can be confirmed when the price moves below the VWAP line. You can sell at the VWAP in the direction of the trend.

2. Average Directional Index

 ADX indicator helps us in determining the trend’s strength.

ADX tells us whether the ongoing trend has the strength to continue going up or down. 

Its values oscillate between 0 to 100, and one should remember that the higher the value higher will be the strength of the trend. The default look-back period of ADX is 14 periods but can be changed according to the volatility of stock or index.

ADX value below 25 indicates a very weak trend whereas value above 75 indicates a very strong trend. ADX is generally not used alone, rather it is used along with other trend-following indicators like Supertrend for filtering the false signals.

            If values of ADX is between in this, then we should follow this:

10-20 = means nothing in this share, exit now

20-30 = it is medium we should wait for few months

30-40 = high probability to go up

Above 40 = very high 98% probability is going up, so pick the share in this movement

 

 3. Donchian Channel

 

When doing intraday trading one also needs to analyse volatility indicators that help us in analysing if the volatility in the stock is high or low. We can use the Donchian channel for this purpose in intraday trading. Donchian Channel is constructed by calculating Highest High and Lowest Low for a pre-defined period. 

When there is a breakout of the Donchian channel from the upper or lower band then it is considered as the starting of a new trend. The Donchian channel is also useful for studying the volatility of the price as shown in the above chart. If the price is stable then the Donchian channel will be narrow. But if the price fluctuates often then the channel will be wider.

Happy Trading & Happy Investing

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