10 Trading Indicators Every Trader Should Know

In trading, spotting trends is half the battle. The other half is figuring out what those trends might mean for your next move. While no tool can predict the future with certainty, trading indicators give traders valuable clues. They’re like signposts on a market map—pointing to potential momentum shifts, overbought or oversold conditions, and possible reversals.

In this guide, we’ll explain what trading indicators are and walk you through 10 of the most popular ones used across stocks, forex, and crypto.

What Are Trading Indicators?

Trading indicators are mathematical formulas applied to price data. When plotted on a chart, they help traders spot patterns that might not be visible from raw price action alone.

• Leading indicators hint at what could happen next.
• Lagging indicators confirm what already happened.

Used wisely—and often in combination—indicators can provide a more complete picture of market dynamics.

10 Popular Trading Indicators

1. Simple Moving Average (SMA)

The SMA calculates the average closing price over a set number of days. By smoothing out short-term price noise, it helps traders see the bigger trend—bullish or bearish.

👉 Tip: Use SMA lines as support and resistance guides.

2. Exponential Moving Average (EMA)

Like the SMA, but with a twist—the EMA gives more weight to recent data, making it quicker to react to price changes. Many traders pair short-term EMAs with longer-term ones to spot crossovers that signal entries or exits.

3. Moving Average Convergence Divergence (MACD)

The MACD compares two EMAs to measure momentum. When the MACD line crosses above the signal line, it may indicate a buy opportunity; when it dips below, it may suggest a sell.

👉 Think of it as a momentum detector.

4. Fibonacci Retracements

Fibonacci retracements use mathematical ratios (23.6%, 38.2%, 61.8%) to estimate pullbacks within a trend. Traders use them to identify support and resistance levels during retracements.

5. Stochastic Oscillator

This oscillator measures whether an asset is overbought or oversold by comparing current prices with past ranges.

• Below 20 = oversold
• Above 80 = overbought

6. Bollinger Bands

Bollinger Bands expand and contract based on volatility. Prices touching the upper band may signal overbought conditions, while touching the lower band may indicate oversold conditions.

👉 Great for spotting volatility breakouts.

7. Relative Strength Index (RSI)

One of the most popular oscillators, RSI shows momentum on a 0–100 scale.

• Over 70 = overbought
• Under 30 = oversold

👉 RSI is often paired with other indicators to confirm entry and exit points.

8. Average Directional Index (ADX)

The ADX doesn’t show direction—it measures trend strength. A reading above 25 often suggests a strong trend; below 20 indicates a weak one.

9. Standard Deviation

This indicator measures market volatility. A higher standard deviation means bigger price swings; a lower one suggests calmer conditions.

10. Ichimoku Cloud

One of the most comprehensive indicators, the Ichimoku Cloud uses multiple lines to show support, resistance, and momentum all at once. If price candles sit above the “cloud,” the market is considered bullish; below the cloud, bearish.

The Bottom Line

Trading indicators are not magic wands—they’re tools. They suggest possibilities, not certainties. Used on their own, they can be misleading. But when combined with market news, research, and solid risk management, they can give traders an edge in navigating complex markets.

👉 Always remember: indicators highlight what might be happening, not what will happen. Trade smart, stay diversified, and use them as part of a broader strategy.