How to Choose Your Technical Indicators on NinjaTrader

Did you know day traders that invest in premium indicators significantly outperform the rest of the market?

While the stock market can get complicated at times, indicators help to do the calculations for you to create a visual signal. This can help make data easier to read and understand.

There are quite a few different kinds of technical indicators available. These are all designed for different kinds of traders at different experience levels. This is why choosing the right signals is so important.

Interested in learning more about technical indicators? You’re in the right place. Here’s a complete guide on day trading indicators along with how to find the right indicators for you.

What Is Day Trading?

Day trading is a specific trading style that involved entering and exiting a position within the same trading day. This means that you will buy and sell a tradeable asset in a shorter time. Day traders can do this with stocks, options, and even futures.

While many may say that this is purely based on lucky timing, there are trends you can look out for to guide your trades. Day traders often use data and research to accurately time the markets. Most day traders work on margin, meaning that they trade with large amounts of money to secure a decent profit every day.

What Are Indicators?

Indicators form the basis of indicator-based day trading. This is a style of day trading that uses business data to identify and predict trends in the market. In simple terms, these indicators give you a glimpse of how the market will progress over time. Having this information will help you know when to buy in and when to cash out.

Indicators are a visual representation of analytical data. This makes it easy for traders to visualize a trading strategy instead of having to look through a bunch of numbers and formulae. While these numbers may be accurate, a visual representation allows for traders of all experience levels to use them to make better trades.

Indicators are useful separately or as part of your trading platform. This is an even easier way to use the indicator as it will layer over the real-time chart. This can give you a very accurate view of the stock price so that you can choose when to buy and at what closing price you want to sell.

Why Are Indicators Important?

Indicators are a great tool to help navigate the stock market. Modern organizations that are listed on stock exchanges are incredibly complex. This complexity makes it difficult to predict how they will perform in the market.

If any stock or future is unpredictable, there is a certain amount of risk that comes along with it. This means that buying into the company will come with more risk than if you were to use an indicator. As mentioned above, an indicator relies on tangible business and industry data to give you a good idea of how the asset will react in the market.

While these aren’t completely foolproof, they will allow you to formulate accurate strategies and help you visualize your strategy in real-time. Indicators can show up visually in the form of a layer on your price chart. This means that you can spot opportunities as they arise in real-time.

Different Kinds of Indicators

As mentioned above, indicators are a visual representation of business data. This data is then converted into a formula that can be visualized to create investment strategies. Different indicators derive from different sets of business data.

This allows you to base your trading patterns on a wide set of information. Some indicators are more complex than others, providing traders of all experience levels a tool to help them trade.

Looking for a quick breakdown of the most popular kinds of indicators? Here are some of the best options you can use.

OHLC Average

The OHLC average indicator is one of the most popular trading indicators for beginners. This indicator tracks and interprets averaged business data. This average takes the average open, high, low, and closing price of any particular stock, option, future, or asset into account

This is a common technical indicator for beginners as it can be displayed in the form of a chart. This chart is designed to show you the opening price of the asset along with the highs, lows, and closing prices.

HLC Average

The HLC indicator is a trend-based indicator. This is a simple indicator that manages the comparison of the MA value of the opening price, the MA value of the high, the MA value of the low, and the MA value of the closing price.

This indicator will form a bearish candle along with a bearish crossover signal. This will provide you with clear information to set automatic triggers.

Moving Average

The first thing people always think of when it comes to indicators is if you can use more than one. The answer is an absolute, yes. This is often referred to as a crossover strategy. This strategy is when you use more than one indicator and layer them on top of each other.

When the two indicators cross prices, this is called a moving average. This is one of the most straightforward strategies you can use when trading. An alternative version of the price-crossover strategy can occur when a short-term moving average crosses a long-term moving average.

Moving Average Convergence Divergence Indicator (MACD)

Crossovers can occur in many different indicators such as the moving average convergence divergence (MACD). This indicator provides crossover signals when the MACD line crosses the signal line or when the MACD line moves above or below zero.

Relative Strength Indicator (RSI)

The relative strength indicator indicates the strength of a particular stock or asset and signals its likelihood of pulling back. This is another indicator that can be used with others to provide crossover signals. If the indicator is moving above 70 or 80 and then moves back below, this could indicate that it could be pulling back.

Benefits of NinjaTrader Indicators

Not all indicators are made the same. While some are vague estimations, others are based on data and experience in the market. Looking for quality indicators you can trust? Here are some of the benefits of using NinjaTrader’s technical indicators.

1. Simplify Price Moves

The visual aspect of technical indicators makes it easy for traders to understand. These indicators compress tons of complex business data in a simple and easy-to-understand formula. This formula is then graphed to allow traders of all skill levels to understand it.

Indicators allow you to understand and comprehend complex data even if you don’t know how to do the underlying math. Due to this, it’s important that you only use indicators from a trusted source.

2. Easy to Interpret

Business data can be complicated and confusing. Even if you are an economist, it can take quite a while to go through all the data yourself. Indicators from NinjaTrader make the data easier for you to interpret and digest.

The charts and visual nature of the data allow you to overlay it directly on the real-time price chart. This makes it even easier to see where you should buy and where you can safely secure your profits.

3. Perfect for Training

Indicators can be complex yet simple at the same time. This makes them the perfect tool to help people learn how to trade on the stock market. Day trading includes quite a few core trading concepts. This includes calculating averages and understanding when to buy and sell to secure a profit every time.

The fact that the information is displayed in the form of a chart means that beginners can easily understand it. Most trading platforms make use of candlesticks to display movement. These candlesticks are green or red depending on whether the price is going up or down.

Get Started With Technical Indicators From NinjaTrader

Day trading is a particular trading style that relies on accurate and consistent information. This is because most day traders will enter and exit multiple positions within a single trading day. To help you navigate the complex market, you can make use of technical indicators.

Even if you are a beginner, there are simple indicators you can use to help you anticipate the market and trade like a pro.

If you have any questions or want to learn more about how to get started with NinjaTrader, feel free to contact us today.

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