Indicator Basics: My Favorite Indicators
I always make my final decisions based on the price chart, but here are the indicators that I use most.
Trend Indicators
I use a 100-day Exponential Moving Average almost exclusively to identify trending stocks. Look for price respecting the moving average to signal a trend, or whipsawing for a ranging market.
Money Flow
Chaikin Money Flow gave to many false signals, so I developed Twiggs® Money Flow to identify accumulation or distribution.
Momentum Indicators
I do not use oscillators that much, but my favorites are the Detrended Price Oscillator, which is great for highlighting divergences, and the classic Stochastic Oscillator.
Volatility
You can't do better than Jack Schwager's Volatility Ratio.
Trend Channels
While not really an indicator, my favorite tool for following trending markets is the Standard Deviation Channel.
Author: Colin Twiggs is a former investment banker with almost 40 years of experience in financial markets. He co-founded Incredible Charts and writes the popular Trading Diary and Patient Investor newsletters.
Using a top-down approach, Colin identifies key macro trends in the global economy before evaluating selected opportunities using a combination of fundamental and technical analysis.
Focusing on interest rates and financial market liquidity as primary drivers of the economic cycle, he warned of the 2008/2009 and 2020 bear markets well ahead of actual events.
He founded PVT Capital (AFSL No. 546090) in May 2023, which offers investment strategy and advice to wholesale clients.