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2023 Best Indicators for Day Trading Like A Pro

Best Indicators for Day Trading

Day trading requires in-depth understanding of the trading business itself for your gains to outweigh the loses. After all, traders are aiming to make the most out of small price moves in just a day. Ending a trading day successfully involves being aware of key techniques and tools such as knowing what the proper indicator is and when the best time is for buying and selling.

Finding and making use of the best indicator that works for you is key in trading. After all, how do you expect yourself to succeed in the trading business if you have no means of interpreting the trends that influence your actions?

Below is a breakdown of the aforementioned tools and some pointers in order to help you with day trading:


Relative Strength Index (RSI) is a momentum indicator that measures the magnitude of recent price changes in order to assess the overbought or oversold of conditions in terms of the asset’s price.

An RSI is displayed with a line graph and numbers that read from 0 to 100.

Which Moving Average Is Best For Day Trading?

Finding the best moving average for day trading increases the reliability of the other technical trading strategies one may opt to use. It is typical for traders to use 5 or 10 or 15-minute charts when it comes to moving averages. The 10-minute chart is most widely used for it gives ample for stocks to trend upwards but not so much that profits are given away.

What Is The Best Volume Indicator?

Apart from technical indicators, volume indicators are also widely used to observe movement of stocks by tallying up and quantifying trades.

On-Balance Volume (OBV) uses positive and negative volume flows and transforms the information into a single one-line indicator to have a cumulative measure of buying and selling pressures. An OBV observes potential breakouts and breakdowns. Although the indicator may seem quantitatively driven, the ultimate significance of the OBV lies on the overall movement of the lines over time and its slope. A rising OBV indicates rising prices and should ideally confirm trends. If the price is rising but the line is flat or falling, it suggests that the price might be near a top. Similarly, the OBV is rising but the price is stable, it is likely that the price will increase.

Is MACD A Leading Indicator?

MACD’s nature of analyzing a market over time with the price already in motion makes it a lagging indicator.

A Fibonacci sequenced setting tunes the 5-8-13 bar combination simple moving averages. This moving average examines the relative relationships between the moving averages and the price to observe for bullish or bearish trends. Additionally, slopes are present to reflect subtle shifts in a short term momentum, with the increase in momentum suggesting a buying opportunity for traders. Furthermore, large-scale whipsaws might be present in this moving average when in a trendless or high volatility market. This is useful for traders in that it acts as a warning for them to take precautions in their movements or to step aside.

What Is A Bullish MACD?

If the MACD lines are above zero for a steady period of time, an upwards trend is likely happening and is a signal for potential buys. Conversely, if the lines are below zero, then a downward trend is expected and hints for selling.

A MACD is considered as bullish if it rises and crosses above the signal line— a line generated over nine days of exponential moving average of the MACD.

How Do You Use RSI Indicator For Day Trading?

If the RSI reading is 70 and above, it is an indication that the stock is overbought or overvalued. Thus, trend reversal or corrective pullback in price is likely to happen. Meanwhile, readings that range from 0-30 mean that it is a buying opportunity for traders—the stock is oversold or undervalued.

What Is The Difference Between RSI And MACD?

Moving Average Convergence Divergence (MACD), unlike RSI, is an oscillating indicator that is based on two moving averages of an asset’s price. Its lines fluctuate above and below zero to illustrate momentum and trends that it is able to foresee.


Whichever indicator, time frame, or technique you choose, it is important to know that its effectiveness when it comes to your moves is the most important aspect. What strategy might work for you in one market does not always mean it will carry over to the next. Furthermore, keep in mind that you are free to explore and experiment with these techniques. Mix them up, use two or three of them in conjunction with one another for as long as you deem it beneficial.

How should you make use of your trading day when stocks are highly volatile?

A high volatility stock filter or a screen is put into use to find stocks regardless of their tendency to move a lot. This filter narrows down the list of stocks it will present the trader once they have set up a criterion for what they are looking for. After deciding on which screen program to use, choose a number of stocks that met your desired volume, volatility, and other characteristics then proceed to trade the selected stocks all week. Regularly use the screen, perhaps once a week, to optimize its use and keep in mind that because these stocks have high volatility, being extra attentive is vital.

There are various types of charts people make use of. A popular chart used by day traders is the line chart. While it gives you the ability to choose a time frame and are relatively simple to read, line charts only provide the closing price. It gives a brief overview of information by connecting one closing price to then other within the given time.

Bar charts contain vertical lines that represent the price range under a certain time. Unlike line charts, the prices shown on the charts are not selective for the closing prices only. Horizontal lines stand for the opening and closing prices. These lines are color coded, usually in the colors black and red, to indicate whether the opening price is lower than the closing and vice versa.

Stocks are most volatile during the first couple of hours after the market has opened for the day, making this best time to participate in intraday trading. To maximize profit potential, a trader may opt to stay and maximize their moves until around 10.30 am E.T. This is just an hour past the opening of regular trading where it is observed for many traders to make their biggest moves for the day. The last hour of a trading day, around 3 to 4 pm E.T., is similar to the opening hours in which big moves and sharp changes are observed. This occurs not only because the day is simply starting or is coming to a close but due to the abundance of dumb money floating around given that amateur or inexperienced traders are joining in on the business.

In short, it is best to participate in day trading during the first hour or so after it has opened and the hour before it closes. For the most part, there is no in-between.

When it comes to intraday trading, candlestick and bar charts are the two most widely used charts due to its ability to cover a more extensive price range.
Both types of charts are of good use because they are able to show the first transaction price, the lowest, and the highest price under a selected time frame. Candlestick charts, however, only display price movement and have no indicators when it comes to volume. To maximize its capacity to produce advantageous data and information, the best time frame for candlestick charts would be 1 to 3 days for short term patterns that are valid for 1 to 2 weeks.


What Are The Best Trend Indicators?
Let’s talk about noticing trend reversals more clearly (apart from the previously mentioned indicators).

Mark Fisher, the author of the book The Logical Trader recommends the “sushi roll” technique as one of the suggested indicators when it comes to trend reversal. A sushi roll indicator contains ten bars that will provide the trader insights regarding the trend. The first five out of then ten are enclosed in the remaining five, comprised of high and low bars. The outer bars are then enveloped with a higher high and a lower low. A downwards direction of the roll signify trend reversal and suggests of buying or exiting a position.

Fisher also suggests making use of the outside reversal week technique and in many ways, it is like the “sushi roll”. A key difference is that the outside reversal week uses data starting in Mondays and ending on Fridays instead. It takes 10 days’ worth of information and occurs when a five day trading week is followed by an outside or engulfing week that contains higher highs.

Should I Buy Oversold Stock?
Many are wondering if it is always best to buy oversold stock. It is important to know that an oversold indication does not always mean green light in terms of buying the stock. It is more of a warning to traders — to give awareness that the asset is currently in its lower portion of the recent price range and that it is trading in a lower ration than it usually does.

What Happens When The 50 Day Moving Average Crosses The 200 Day Moving Average?
An intersection or “cross” between the 50 day and 200 day moving average can be either a bullish or bearish indicator.

A “golden cross” appears when the 50 day moving average crosses and overtakes the 200 day moving average. This is considered to be a bullish indicator.

A “death cross” appears when the 200 day moving average crosses and overtakes the 50 day moving average. This is considered to be a bearish indicator.

Candlestick Charts
Candlestick Charts
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NQ Day Trading Trendline Break

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