What are indicators? An indicator is a type of scale which helps in analysing and predicting future movements of certain economic activity.

What are indicators? An indicator is a type of scale which helps in analysing and predicting future movements of certain economic activity. Similarly in technical terms, there are different indicators which tell us about the direction of the market or stock and help us in making informed decision for a specific time period. Technical indicators mainly serve 3 functions: to alert, confirm and to predict. Indicators give alert signals if any reversal is going to take place. Indicators confirm price action and volume traded. We use indicators for predicting the future price movement.

Indicators are classified based on types and purpose.

Types of Indicators:

1) Leading Indicator
They use a small period in their calculations, hence it leads a price movement. They help in predicting future price movements. Most popular leading indicators are Relative Strength Index (RSI) and Stochastic
2) Lagging Indicators
Gives signal after the beginning of trend and when reversal has also taken place. Moving Average is the most common lagging indicator.

Indicators based on Purpose:

1) Trend Indicators
Trend indicators Indicates the trend of the price movement. In price movement if the price if it is moving above average then a bullish trend is formed and if the price movement is below the standard then a bearish trend is formed.
2) Momentum Indicators
Momentum indicators in technical term are used to determine the strength or weakness of a stock\\\’s price.
3) Volatility Indicators
Volatility indicators analyse the changes in the prices of a particular timeframe. When prices change faster volatility increases and when slower it decreases.
4) Volume Indicators
Volume indicators are those indicators which analyse volume. In stock market, high volume means active trading.