An indicator is a tool used in technical analysis to interpret price data and forecast potential future movements. Common indicators include Moving Averages, Relative Strength Index (RSI), MACD, and Bollinger Bands. They help traders identify trends, momentum, volatility, and reversal signals. Indicators can be leading or lagging, and are often used in combination for better accuracy. While they provide valuable insights, they aren’t foolproof and should be complemented with price action analysis and solid risk management. Customising indicator settings based on asset behaviour and time frame can improve strategy performance.
Example:
A trader uses moving averages to identify prevailing trends in stock prices.
