Although traders have different preferences and strategies, there are some technical instruments and tools that are often underrated in trading. Headway experts discuss a few examples in the article.
Volume Profile displays traded volume at different price levels over a period. It provides insights into areas of high/low liquidity and identifies support/resistance levels. Traders often overlook it in favor of more popular indicators.
Market Profile focuses on time spent at price levels, offering unique perspectives on market dynamics. It provides a visual representation of price distribution, identifying areas of price acceptance and rejection. While not as widely used as other indicators, it has value.
While Fibonacci retracements are often used to identify potential support and resistance levels, Fibonacci extensions are frequently overlooked. These extensions project possible price targets beyond the current trend, based on key Fibonacci ratios, and can be utilized to set profit targets and identify areas where a trend may face resistance.
Average True Range (ATR)
ATR calculates market volatility by averaging high and low prices over a period. This information is useful for Stop-Loss levels and determining position sizes based on volatility. Despite its practical use, some traders overlook it in favor of more well-known indicators.
The Ichimoku Cloud is a technical analysis tool that combines indicators to provide a comprehensive market view. It includes Moving Averages, support and resistance levels, and trend identification. It is popular in some communities but underused in others.
Currency Strength Indicators
Currency strength indicators measure the relative strength or weakness of different currencies. They depend on the strength of the reference currency and the other currencies in the basket. Currency strength indicators, such as the Relative Strength Index (RSI) or the Currency Strength Meter, can help identify the strongest and weakest currencies and their trends.
Advanced Trading Indicators
Advanced indicators, such as AD Line, Breadth Indicators, and Advanced RSI Indicators, analyze the market’s internal strength and capital flow. They provide signals on price movements’ validity and the current trend’s strength.
Theory analysis indicators
Theory analysis indicators, including divergence, multiple intersections, and correction indicators, provide signals about momentum changes and potential entry/exit timing. Traders should be fully aware of the indicators on the trading platform and know which indicators help in understanding trading more.