Lesson 24 of 28
The wider indicator toolbox: a categorized overview
There are hundreds of technical indicators, and new ones appear every year. The good news is that nearly all of them fit into a few main categories. If you know which question each tool answers, you do not need to learn them all. This lesson offers a map of the toolbox and a way to choose from it.
The category table
| Category | Main question | Examples | Best conditions |
|---|---|---|---|
| Trend | What is the dominant direction? | SMA, EMA, Ichimoku, Supertrend, Parabolic SAR | Trending markets |
| Trend strength | Is there a trend, and how strong is it? | ADX, DMI, Aroon | Filtering which method to use |
| Momentum | Is the move accelerating or slowing? | RSI, Stochastic, MACD, CCI, Williams %R | Ranges and spotting divergence |
| Volatility | How wide are price swings? | ATR, Bollinger Bands, Keltner Channels | Risk management and stop placement |
| Volume | How much participation is behind the move? | OBV, MFI, Chaikin Money Flow, VWAP | Markets with reliable volume data |
Some tools sit on the border of two categories. MACD reflects both trend and momentum, for example, and MFI blends momentum with volume.
How to choose
- Start from your trading style. A trend follower needs trend and volatility tools; someone who trades ranges will lean more on oscillators.
- Consider the market. In forex and spot gold, volume data is incomplete; in crypto, higher volatility may call for different ATR settings.
- Few but deep. Two or three tools from different categories whose behaviour you know well are more useful than ten you know superficially.
- Test before using it for real. Check a tool on historical data and then on a demo account, and record the results honestly.
An important reminder
No indicator knows the future. They are all different representations of past price and volume. Their value lies in organising how we look at the market and helping us make more consistent decisions, not in guaranteeing outcomes. Even with the best combination of indicators, risk management remains the most important part of the job.
Key takeaways
- Most indicators fall into trend, trend strength, momentum, volatility or volume.
- Choose tools based on your trading style and the market you trade.
- A few tools known deeply beat many tools known superficially.
- Indicators are not a substitute for risk management.
This lesson is for education only and is not a recommendation to buy or sell any asset.