Good Indicator For Intraday Trading

Good Indicator For Intraday Trading – There are various indicators associated with day trading; indicators are always what people are looking for in order to find the holy grail of trading. However, more successful traders know that there is no single indicator that will get you to the next step in a trade. They know that little is better than quantity. There are some volume indicators out there, the best volume indicator for day trading is the volume profile!

Why is the volume curve the best volume indicator for day trading? Because volume profiles identify horizontal areas of high volume. The price with the most volume. This creates support and resistance levels based on pure volume. Selling more than buying pushes the price lower and vice versa. The volume profile identifies these levels and the level of price attractiveness. They can be used for any asset and any time frame. The sheer versatility of the volume profile makes it the best indicator for day trading.

Good Indicator For Intraday Trading

A volume profile is a volume indicator displayed as a histogram on the y-axis of the chart. It shows the trading volume at the asset level. Volume profiles are based on specified timeframes. Based on the example below, the volume profile is a blue and yellow histogram. Shown on Apple stock below. The Volume Profile time frame is based on the current year.

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As shown in the image below, the volume profiles have different lengths and different coloring shares. The first thing you need to know is that there is a large volume region (darker in color) and a small volume region (either edge of the entire volume outline). Volumetric contours naturally have regions that stand out from others. This will be important as we read the rest of this article.

All of these areas are important to understand in a volume profile and can constitute a core strategy in their own right. let’s see:

The chart above is on TradingView, the indicator is free and can be found using the following steps:

Several different volume profiles can be used. The three main Volume Profile indicators are Visible Range, Fixed Range, and Session Volume. For day trading purposes, we recommend that traders focus on fixed range and time period volumes. The visible range shifts and changes as you scroll the chart. Use something specific!

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A fixed-range volume profile defines a specific time range. It measures the volume level horizontally within the selected range. It allows you to select the start time and end time of the volume profile range. The volume profile example in the image above shows Apple stock in a fixed range. From early October to the end of October 2019.

A session volume profile is very similar to a fixed range in that it reflects a certain time. The only difference is that it divides each “session” into its own volume profile. A session can be defined as a whole day. Sessions can also be defined as consecutive days. If you have a 5-day volume profile, it will change every day because it reflects the current five days.

When it comes to day trading, it is best to use a combination of both (fixed range and volume). Just because you’re day trading doesn’t mean you should ignore overall market movement and where key support and resistance levels are based on the macro structure.

Another added benefit of using a larger frame fixed range is that the current session range has not yet formed the minutes of the day, so you have to give it some time to form before it can use you. You can also use the trading profile from previous days to find some key support and resistance levels.

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For day trading, any asset can be traded based on the volume profile. Using it does not vary by asset, as the volume profile provides consistent analysis for day traders.

Before delving into the volume profile and day trading, you must understand what the key components of the volume profile are and what they tell traders about the market.

The volume profile consists of two main sections, the high volume node and the low volume node. High volume nodes are where the volume of transactions is the highest, within the price range. The main high-capacity nodes are located around the control point. Or the largest single trade volume (red line) for the selected time period. High capacity nodes are green boxes in the image. Areas outside the green box are low-capacity nodes, or edges of high-capacity nodes.

The edges of the volume contours are strong support and resistance levels for the price. This is because the interest level of low volume nodes is low and the price is attracted by the volume. It is common for prices to reject low volume nodes in search of high volume nodes. In some cases, we could see a breakout to a new high capacity node.

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When day trading one should be mindful of these levels and the fact that prices can fluctuate in high volume areas, rejecting the edges on both ends.

This is where session volume configuration files come in handy. After identifying major support and resistance levels, day traders can take a deeper look at daily levels. Weigh these advantages.

The example below is a 5 minute chart on Apple. Session volume profiles are divided daily. Edges are marked in red rectangles where low-capacity nodes are located. That’s the support and resistance levels throughout the day, and they hold up well. It doesn’t matter if they do break, because it means broken support can turn into strong resistance. They also extend to the next day. An opportunity is provided to you in the form of a current session profile.

Volume profiles can be used to identify trading opportunities in certain trading strategies. The first is the callback strategy. Pullback trading is the most basic trading. Where will you be following trends. Either a bullish trend, highs and higher lows or a bearish trend, lower lows and lower highs.

Best Volume Indicator For Day Trading

Pullbacks are traded on the premise that previously broken resistance will turn into support for the bulls. While the previously broken support will turn into resistance for the bears. We can combine this information with volume profiles to identify trading opportunities. Be it day trading or swing trading. We will focus on day trading in this area.

Based on what we know about the volume profile, the “edge” where high volume meets low volume is a key area of ​​support or resistance. If the price breaks out of this area, we have a quick run to the next high volume area. Another option is that they hold and do not trade.

Callback trading is born on this premise. Wait for that edge to be broken and look for a move towards the big volume that was just broken, meaning support turned resistance or resistance turned support.

Now you don’t have to wait for the day to end, you can easily do this throughout the day.

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In the image above, you have a 5-minute SPY chart. From here we outline important key advantages. From here, if we break above, I expect a return to this area to test volume, hold and continue higher.

This is based on structure and volume distribution. The bullish structure turns a double top of resistance into support for a move higher next spring.

Breakout trading is a more aggressive form of momentum trading that we can use when doing volume profiles. It is very similar to a pullback, however, instead of waiting for a breakout and retest.

Breakouts involve identifying volume curve edges, either within a day or using the previous day’s volume curve.

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In this case, we want to identify a low volume area during the day, even if it is not part of the “low volume” discolored area. It’s still an advantage. We have the potential to break through to the next high-volume area and the next edge. We do have a temporary stall on a breakout near the POC or maximum volume area. Ultimately opening the way for resistance. The breakout point is the blue candle.

Everything I mentioned in this article can be applied to other assets and can be used to trade options. Options have more leverage than stocks, which you can use to your advantage. It can be a double-edged sword. That being said. This strategy can prove to be a fruitful choice if you can learn risk management.

You can analyze an underlying and trade options on that underlying. If you’d like to learn more about options, check out our options page.

If you want to learn how to day trade

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