If you have an active trading style and have been looking for a way to improve your profitability, chances are, you’ve heard of TradingView before.
This well-known platform is full of popular indicators, offers superior charting capabilities, and instantly connects you with an online community of like-minded traders. Whether you’re looking for a technical indicator or a fundamental one, TraderView has exactly what you need to analyze the data you’re after.
That said, since there are so many premium indicators offered on the platform, you might find yourself wondering which one is the best TradingView indicator. Well, although the answer really varies depending on what you need, we’re going to answer that question in the article below!
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What Do Indicators Do?
Although indicators don’t provide financial advice in the traditional sense, they can be used by a stock trader to inform themselves of likely price movement. The vast majority of indicators can be used over a specified period of time, so traders can track current movements, past movements, or both!
While you may have an excellent indicator for tracking price movements, chances are, you’ll want to use more than a single indicator. Fortunately, TradingView allows you to use multiple indicators on a chart, giving you all the information you need about market movements and trends on a single screen.
Different types of indicators allow you to track different types of data, so it’s important that you’re aware of the differences between them. Let’s take a brief look at the different types.
The Four Types of Indicators
These indicators are useful for identifying the current momentum of assets within the market. Not only can they tell you the overall strength of current movements, but they can also be used to predict when a reversal will occur.
Trend indicators—which are sometimes referred to as “oscillators”—allow you to track market trends (movement). These are extremely useful not only for identifying current market movement but for predicting future movement as well.
Unlike trend indicators, a volatility indicator simply tells you how volatile the market is at a given point. The higher the volatility, the higher the potential for larger gains! On the flip side, higher volatility also indicates a greater chance of loss, so that’s definitely something that you’ll want to keep in mind.
Volume indicators allow traders to track the volume of trades across a market. By using an indicator for volume, traders will be able to see which sectors (or even specific stocks) in the market are being traded the most/least.
The Best TradingView Indicator: Our Top Contenders
Now that we’ve briefly gone over the different types of indicators, let’s take a look at our favorite picks. As mentioned above, which one is “best” for you ultimately depends on the specific type of data you’re trying to track.
That said, we’re sure that each of these will be an invaluable tool for you at some point or another!
Relative Strength Index
The Relative Strength Index (or “RSI”) is a type of momentum indicator that’s especially useful when trading options on individual stocks. This indicator ranges from 0 to 100. The higher the number, the more the stock is being bought.
The lower the number, the more the stock is being sold. Generally speaking, you’ll want to avoid stocks below 30 or above 70.
Parabolic Stop and Reverse
This directional trend indicator—which is also known as the Parabolic SAR—shows traders the anticipated price movement (relative to the current market price) using dots. A dot placed above the current price indicates a downtrend, whereas a dot placed below the current price indicates an uptrend.
Using this information, traders can determine whether they should go short or long.
Bollinger bands are a volatility indicator that tracks resistance levels in the market. This type of indicator shows the market moving average, and then places two lines (bands) on the outsides of the market average.
The spacing of the bands shows traders whether the market is quiet or loud (and to what extent it is).
The accumulation and distribution indicator shows traders the flow of money into a stock and the flow of money out of a stock. You can think of it as a visual representation of the “supply and demand” for that particular stock.
From monitoring oversold conditions and tracking market volatility to anticipating price movements and more, there’s no doubt that using an accurate trading indicator—or indicators—can help traders turn a profit.
Simply being a complex indicator doesn’t always mean that an indicator is worth your time. In fact, sometimes the simplest indicators will provide the most actionable information! Chances are, if you’re looking for an indicator, TradingView will have it (no matter which one it is!).
Click here to start taking advantage of the wide variety of indicators, charts, and analytical tools on TradingView!