New Insights From Classic Indicators by Amber Hestla
Analysts have developed hundreds of technical indicators over the years. Sometimes new indicators help technical analysts discover success. Other analysts find success by looking at old indicators in new ways. Here, we explore a popular indicator from a different perspective.
When analyzing the markets, all analysts work with a relatively small amount of data. For prices, there’s just the open, high, low, and close. Some may add in volume, and futures traders might add open interest and the Commitments Of Traders (COT) numbers to their data set. Given the small number of data points, it’s a little surprising to see how many ways the same numbers can be sliced and diced to create indicators. A single software platform can include more than 300 different indicators and each indicator is some sort of variation of the basic data.
Since many indicators are similar, they will often simply confirm each other...