Lesson 2: Indicators Overview

Indicators represent a group of technical analysis used by traders and investors to identify and predict a
price move in a X time.

 SMA: Simple Moving Average is the average move of a ticker in a X time.

 EMA: Exponential Moving Average is the average move of a ticker in a X time calculated with a
coefficient that provide more weight to the last period of X time.

 VWAP: Volume Weighted Average Price is the daily ratio of the price traded to total volume
traded.

 RSI: Relative Strength Index indicate the rate of price in a certain period of time. Traders use the
RSI to identify an overbought or an oversold symbol.

 MACD: Moving Average Convergence/Divergence is a technical indicator used to identify a trend

reversal. MACD graph is represented with two lines. The fast line(calculated by subtracting the
EMA12 with EMA26) and the signal line(EMA9). The fast line crossover above the signal line,
indicate an uptrend reversal. The fast line crossover below the signal line indicate a downtrend
reversal.

 RMI: Relative Momentum Index is similar to the Relative Strength Index(RSI), that reduce the
speed of oscillations, limiting the amount of false signals.

 MFI: Money Flow Index is an indicator that consider the price and volume to measure the buy
and sell momentum. Similar to the RSI, the MFI use an overbought and an oversold indication.

 Standard Deviation: Standard Deviation indicate the volatility range of a symbol. Simply, if we
trade a $10 dollar Symbol and this Symbol is moving between $12 and $8, the Standard
Deviation is $2.

 Bollinger Bands: Bollinger Bands are used to measure the Symbol Volatility. Is mostly combined
with three lines. The lower line and the upper line(bands) and the middle line. The middle line is
usually the SMA20. The upper band is calculated using the SMA20 + 2 standard deviations. The
 lower band is calculated using the SMA20 – 2 standard deviations. For many people the
indication of a buy is when the price bounce on the bottom band with a trend reversal and a sell
is when the price hit the upper band.

 Pivots Point: Previous day average high, low and closing price. To calculate the pivots we must
use: Closing Price, High Price, Low Price and Average Price. Average price is calculated with
AP=(Closing Price + High Price + Low Price)/3