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Indicator Basics

Relative Strength & Overlays

Moving Average Types

Moving Average Systems

Moving Average Oscillators

Trend Indicators

Momentum Oscillators

Money Flow

Volume

Trailing Stops

Volatility Indicators

Momentum Indicators

The most commonly used momentum oscillators are:

Momentum has three weaknesses:

  1. It does not fluctuate between set limits, meaning that Overbought and Oversold levels have to be re-set for each stock;
  2. Movements tend to erratic; and
  3. Unusually high or low prices at the start of the indicator window (e.g. 14 days ago on a 14 day indicator) cause distortion. This is shown in more detail in Momentum.

Rate of Change fluctuates as a percentage around the zero line, but the indicator still suffers from the last two weaknesses.

RSI addresses all three weaknesses: it is smoother, not as susceptible to distortion and fluctuates between 0 and 100.

Stochastic indicator compares closing price to the price range (High minus Low) for the window period. This is an improvement on the above three indicators which measure relative changes in closing price. Stochastic movements can be erratic and many analysts use the internally-smoothed Slow Stochastic indicator, which they find more reliable.

Types of Momentum Indicators

Closing Price relative to previous Closing Price

Momentum
Rate of Change (Price)
Smoothed Rate of Change
Relative Strength Index
TRIX Indicator

Closing Price relative to Range

Stochastic
Slow Stochastic
Williams %R

Closing price compared to Moving Average

Commodity Channel Index
Detrended Price Oscillator

Closing Price relative to High/Low

Williams Accumulation Distribution

High/Low compared to Moving Average

Elder Ray Index

Range relative to Previous Range

Mass index

Range relative to absolute Price Movement

Vertical Horizontal Filter



 
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