Most indicators fall into three groups according to the question they answer: which way price is moving (trend), how fast it is moving (momentum), and how much it is moving (volatility). Knowing the group helps you avoid stacking tools that answer the same question. This page lists the common indicators in each group, what they measure and where to read more. It is a reference list, not a ranking.
TL;DR -- Key Takeaways
- Trend indicators show direction. Momentum indicators show speed. Volatility indicators show range.
- Choose at most one or two from different groups instead of several from the same group.
- Each indicator below has its own guide on this site.
- None of these tools predicts the future. They describe recent price behaviour.
- Test any choice on past charts before using real money.
1. Trend Indicators
These tools smooth price or measure how directional it is.
| Indicator | What it measures | Usual reading |
|---|---|---|
| Simple and exponential moving averages | Average price over a set number of candles | Slope and price position show direction |
| ADX | Strength of a trend, not its direction | Higher readings suggest stronger trends |
| Parabolic SAR | A trailing point that follows price | Position above or below price shows direction |
| Ichimoku cloud | Several averages plotted together | Price versus the cloud shows direction and support |
| MACD | Difference between two moving averages | Crossovers and histogram show trend momentum |
Read more: moving average types explained, ADX trend strength, ATR and Parabolic SAR, Ichimoku cloud, and MACD explained.
2. Momentum Indicators
These tools compare recent price changes with earlier ones. Most are oscillators that move within a range.
| Indicator | What it measures | Usual reading |
|---|---|---|
| RSI | Size of recent gains compared with losses | High and low zones show stretched moves |
| Stochastic oscillator | Close compared with the recent high-low range | %K and %D crossings show momentum shifts |
| CCI | Distance of price from its average | Extreme readings show stretched price |
| Williams %R | Close compared with the recent high | Similar use to the stochastic, on an inverted scale |
Read more: RSI explained, stochastic oscillator explained, and CCI and Williams %R.
An extreme reading is not an instruction to trade against the move. In a strong trend an oscillator can stay extreme for a long time.
3. Volatility Indicators
These tools show how wide price swings are.
| Indicator | What it measures | Usual reading |
|---|---|---|
| Bollinger Bands | Standard deviation envelope around an average | Narrow bands show low volatility, wide bands high |
| ATR | Average size of candle ranges | Higher values show larger typical moves |
| Donchian channels | Highest high and lowest low over a period | Breakouts of the channel show range expansion |
Read more: Bollinger Bands explained, ATR and Parabolic SAR, and support and resistance indicators.
Volatility tools do not show direction. They help with decisions such as whether a range is wide enough to trade or whether a breakout has room to run.
4. Other Groups
Volume tools sit outside these three groups. See volume and VSA indicators for what they can and cannot show in binary options, where volume data may not be available on every asset.
5. Building a Small Set
A sensible set uses one tool per question:
- Trend: one tool, or plain price structure.
- Momentum or timing: one tool, if you need it.
- Volatility: one tool, if the width of the move affects your decision.
Adding a second tool from the same group usually repeats the first. See combining multiple indicators and common indicator mistakes.
Frequently Asked Questions
Which indicator group is most important?
None is. They answer different questions, and the right choice depends on your strategy and the market condition.
Can I use two momentum indicators together?
It is usually redundant, because they respond to the same price changes. A pair from different groups gives more varied information.
Are these indicators available on every platform?
Most charting platforms offer the common ones, but availability varies. Check yours. See trading platforms and custom indicators.
Do indicators work the same on every asset?
Behaviour differs by asset and timeframe, so test settings on the asset you trade.
Related Reading
- Leading vs Lagging Indicators Explained -- how speed and reliability trade off
- Indicators vs Price Action Only -- whether you need indicators at all
- Best Binary Options Indicator Settings by Timeframe -- starting settings to test
- Best Indicators for Short Expiry Trades -- tools for fast contracts
Compare brokers with advanced charting: