The seven best indicators on TradingView [DNU]

Discover the best TradingView indicators and learn how to use them to optimise your trades. 

What are TradingView indicators?

TradingView indicators collate a vast range of historical data – such as opening and closing prices, minimum and maximum prices, and trading volumes – to enable you to analyse financial instruments and make informed trading decisions. Many traders use these technical analysis indicators to plan their trades, establish entry and exit points, and forecast potential price movements.

In this article, we look at seven of the most useful technical indicators on TradingView:

-Relative strength index (RSI) 
-Moving average (MA) 
-Moving average convergence divergence (MACD) 
-Bollinger Bands 
-Fibonacci retracement 
-Stochastic oscillator 
-Volume profile 

Where can I find TradingView indicators?  

You can access the above indicators and many others in TradingView. First, bring up a chart: from the TradingView homepage, select Products in the top navigation bar, select Supercharts, and search for the financial instrument you wish to view. Then select Indicators from the navigation bar above the chart and select or search for the indicator you’d like to add to your chart. To save an indicator in your favourites tab, select the star icon to the left of the indicator.

What are the most popular indicators?

Relative strength index

The relative strength index (RSI) is a momentum indicator that measures the speed and magnitude of a financial instrument’s price movements. The RSI, typically shown on a line graph below the instrument’s price chart, works on a scale of zero to 100. A reading of 70 or above may indicate overbought conditions, while a reading of 30 or below can suggest oversold conditions. The reading is based on a comparison of an instrument’s strength on days when its price rises to days when its price falls.

Traders might use the RSI, in conjunction with other technical indicators and their own understanding of the market, to confirm price trends, identify potential opportunities and to attempt to time their entry into or exit from a market.

Moving average

The moving average (MA) indicator allows traders to see trends in a financial instrument’s price over time, smoothing out the ‘noise’ of short-term price fluctuations. Plotted as a line graph, the MA shows an instrument’s average price over a specific period, usually appearing as an overlay on a price chart.

Traders can view different types of MA on TradingView, including:

• Simple moving average (SMA): The SMA is a lagging indicator that displays an instrument’s average price over a specific period of time. It’s called ‘moving’ because the average constantly changes as the instrument price moves up and down. 

• Exponential moving average (EMA):  Like the SMA, the EMA tracks price trends over time, but the EMA is a weighted moving average that gives more importance to recent price data within the displayed time period.

• Volume-weighted moving average (VWMA):  The VWMA calculates the average price of an instrument over a specific period, but gives more weight to price movements that are driven by large trading volume, essentially to highlight periods when high levels of market participation send prices higher or lower. This is in contrast to the SMA, which treats all price points equally, regardless of trading volume and market sentiment.

Traders may use MAs to identify the direction of a trend and to gauge potential pivot points where prices may change direction. For example, if an instrument dips to its 200-day EMA, a trader might expect the price to rebound, with the EMA potentially acting as a support.

Moving average convergence/divergence

The moving average convergence/divergence (MACD) is a momentum indicator that can help traders identify trends and potential trade opportunities.

Made up of three parts, MACD charts include the MACD line (representing the distance between a shorter moving average and a longer moving average), the signal line (showing changes in price momentum), and a histogram (illustrating the difference between the MACD and the signal lines).

The MACD is one of the most popular technical indicators because it shows the direction of a trend and the strength of buy or sell signals. As with all indicators on TradingView, it should be used in conjunction with other indicators.

Bollinger Bands

Bollinger Bands show the price and volatility of a financial instrument over time. In technical analysis, volatility refers to an instrument’s price fluctuations – how much the price moves up and down within a given period of time.

The upper and lower Bollinger Bands are plotted at a standard deviation from a simple moving average of the instrument’s price. The bands widen when an instrument's price becomes more volatile and tighten when it is more stable.

Many traders might consider an instrument to be overbought when its price approaches the upper band and oversold when it nears the lower band, helping them to establish potential exit and entry points for their trades.

Fibonacci retracement

Fibonacci retracement is a technical indicator that can be used to highlight potential support and resistance levels within a market. The Fibonacci sequence is a series of numbers in which each number (except the first two) is equal to the sum of the preceding two numbers:

0, 1, 1, 2, 3, 5, 8, 13, 21, 34, 55, 89, 144, etc.

In technical analysis, traders focus on the key percentages 23.6%, 38.2%, 50%, 61.8%, 78.6% and 100%, which are derived from mathematical relationships within the Fibonacci sequence. Fibonacci retracement levels appear as horizontal lines on a financial instrument’s price chart, helping traders to identify areas or points where an instrument’s price might meet support or resistance and reverse. Traders may also use Fibonacci retracements to anticipate future price movements and to inform their thinking when adding stop-loss orders to their trades.

As the below image shows, the horizontal lines are drawn on the chart, with the first at 100% (the high on the chart), the second at 78.6%, the third at 61.8%, the fourth at 50%, the fifth at 38.2%, the sixth at 23.6% and the last one at 0% (the recent low on the chart). After a significant price shift up or down, the new support and resistance levels are often at or near these lines.

As with each indicator in this list, Fibonacci retracements are generally most effective when used in combination with other indicators.

Stochastic oscillator

A stochastic oscillator is a momentum indicator that measures the relationship between a financial instrument’s closing price and its price range over a period of time. It can help traders assess whether an instrument is overbought or oversold.

On TradingView the stochastic oscillator appears below an instrument’s price chart. The indicator has two lines, known as the K and D lines. The K line – the primary line on a stochastic oscillator – shows the current price of the instrument as a percentage of the recent price range, essentially showing how close the current price is to the the recent high or low. Meanwhile, the D line is a three-period moving average of the K line.

The stochastic oscillator represents recent prices on a scale of 0 to 100. When the K line is above 80, the instrument is near the top of its range and may be considered overbought. A reading below 20 signals that an instrument is near the bottom of its range and may be oversold.

Volume profile

The volume profile shows the number of trades on a financial instrument at various price levels over a specific period. Displayed as a horizontal histogram, each bar represents the volume of trades at a given price point.

While traditional volume indicators show trade volume over hours, days or months, volume profiles offer a more nuanced view of trading activity at every price point.

Traders can use these profiles alongside other indicators to highlight support and resistance levels, to confirm trends and to plan their trades.