Technical Analysis – Other Technical Indicators to Consider

As the previous two articles suggested, the most popular indicators are trend indicators and oscillators. These are not the only categories that exist, though. The MetaTrader, among others, offers volume indicators as well, and custom indicators that cannot fit into the category of either trend indicators or oscillators. These indicators are still technical ones (everything that is not related to economic news or data is technical) but are not as common as the ones mentioned earlier in the Trading Academy. It doesn’t mean that they do not offer valuable information though; only that they are second-tier ones when it comes to their popularity. Below you can find some categories of other technical indicators, but keep in mind that there are others too.

Different Technical Analysis Indicators

Some of the indicators that fall into these categories are well-known ones which are used in popular trading strategies, such as the Volume Spread Analysis (VSA) strategy. Others simply show the same thing as normal trend indicators or oscillators.

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Volume Indicators

Volume-based analysis has the tendency to be quite accurate. If one can know precisely the supply and demand level for a product, prices can be easily anticipated based on disruptions that occur to this balance. Unfortunately, with a financial product it is not that easy to do that; and it becomes impossible in the Forex market. While Forex brokers offer the possibility of seeing the volume of a specific currency pair, note that this is only the volume traded with that broker. While it does offer a glimpse or an idea about the overall volume, it is not relevant to use it with volume-based theories. Consider that on the Forex market, retail traders represent around 5% of the parties that exchange currencies every day. Other parties are commercial and central banks, other Forex brokers, liquidity providers, money managers, etc. The volume traded by these parties is not shown by the volume indicators to be seen on any retail Forex broker’s site, which tells much about their usefulness.
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The Volumes indicator is the most famous in this category. It shows vertical bars at the bottom of a candlestick chart, and each of these bars correspond to a candle. If the chart is a monthly chart, one bar will show the traded volume in a month; again, for that respective broker, not for the entire market. The Money Flow Index is an indicator that repaints, hence it is not such a useful one for a proper analysis. Repainting means that previous values the indicator showed change based on current ones. Consequently, a proper analysis cannot be made using these types of indicators. The other two that can be seen in the chart above show the same thing.

Bill Williams Indicators

Bill Williams made a vast contribution to the technical analysis field. All the indicators listed below are of his own making, and mark a cornerstone for the technical trader. Moreover, William’s Percentage Range is one of the most famous oscillators, and it belongs to the same guy. These indicators are both trend indicators and oscillators, and, used together, are supposed to offer a general view of the current stance of the market.
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The Alligator indicator is a trend indicator based on three different moving averages. Actually, it resembles the classical moving averages indicator, but the formula behind it is a bit different. Nevertheless, the display on the chart is formed from three lines that intersect and keep a clear order when the market is in a strong trending phase, either bullish or bearish. The moment the fastest line crosses the next one, the market is about to change, as the trend is weakening. Fractals are tricky, as they disappear if the price that follows a fractal makes a new high or low when compared with the period the fractal is set to show. For that reason, while it may seem that they are offering valuable information, fractals are not to be trusted. The Market Facilitation index is one that repaints, and this makes it difficult to use and interpret current prices. Moving forward through that list above, the Accelerator Oscillator does, as the name suggests, look like a classical oscillator. It does not repaint, overbought and oversold levels can be identified, and divergences work like a charm. That is, unless the market is not trending!

Custom Indicators

The Custom Indicators list differs from broker to broker and from trader to trader. Such a list contains the indicators set as default by the Forex broker, as well as the indicators that are imported onto the trading platform. To import an indicator, one must have it saved on the PC, and then upload it to the MetaTrader platform. This can easily be done by pasting it into the right folder. Once imported, that new indicator will be displayed on the Custom Indicators tab. The componence of the list therefore varies uniquely  from trader to trader, and from MetaTrader to MetaTrader.
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Some of the indicators listed above are already in other  categories of indicators that we’ve already mentioned, such as the Alligator, Ichimoku, MACD, Momentum, or Accumulation indicators, but they are listed here as well for completeness. The Awesome indicator you’re seeing in that list is an oscillator. It is more accurate even than the RSI, even though it is subject to interpretation. Both divergences trading and overbought and oversold trading can be accomplished with it. It is truly a wonderful oscillator. The Heiken Ashi is a Japanese indicator that displays candles in one single colour that defines the overall trend. If specific conditions or price levels are not met with future candles, even though a classical candlestick will be red in a bullish trend, the Heiken Ashi will interpret it merely as a correction, and the underlying trend will be still bullish. The opposite is also true in the case of a bearish trend. From this point of view, Heiken Ashi keeps the trader’s eyes on the overall trend, and the temptation to close a trade at any small pullback is overrun.

Besides the categories mentioned here, there are other technical analysis indicators, such as math indicators, statistical ones, logarithmical ones, etc. The idea is that for every type of trader, for every personality, there is an indicator that can help the trading process. There is no indicator, though, that can win trades for you on its own. Trading is not an easy task, and to be good at the art of speculation involves more than just setting an indicator on a chart and buying the oversold or selling the overbought levels. Fundamental analysis and macroeconomics also play an important role in correctly identifying what a currency pair is going to do. After all, what is Forex trading if not comparing two currencies against each other and trading based on the outcome?

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