Trading Indicators for Beginners: What to Add to a Chart

Why do we need indicators for trading and what do they show?

Put the thermometer outside the window. He's honest about how many degrees today, and he doesn't promise anything about tomorrow. The indicator is set up the same way: it takes the candles that have already closed, it drives them through the formula, and it draws a line or histogram.

The StockCharts study formulates this directly about moving averages: "A moving average doesn't predict price direction. Instead, it defines the current direction. However, a moving average tends to lag because it's based on past prices". The mean does not predict the direction of the price, it determines the current, and it lags because it's built on past prices.

Then why do we even need a trading indicator? He solves three things better with his eyes:

• Removing the market noise.. The eye is attached to every candle. The formula smoothes and leaves the general motion.
• Give a number instead of a feeling. "It's been a long time" is turning into a specific meaning that can be compared to yesterday.
• Keep the same criteria every day. The mood changes, and the formula doesn't. That's her main advantage over "I think".

There's another reason it's so much more boring. Most of the time, the market isn't going anywhere - it's in the range. The indicator helps you stay out of it. The fleet. With your finger on the button, just wait until the movement starts.

What are the indicators and how do they differ?

Indicators have hundreds of names for trading, and the questions they answer are only five. Here's the whole map:

A couple of refinements that save months.

Moving average and the oscillator - different devices. The first answer is "where", the second is "how far" - together they complement each other, and the two oscillators next to each other simply duplicate the answer.

Variability It's not about direction at all. It is important to remember that the ATR shows only the price range and is silent about the direction (StockCharts ChartSchool, section ATR). The ATR is needed for stop distance and position size. A beginner looking for a buy signal in it is looking for something the author didn't put in it.

Trade volume It's the only group that's grabbing new data. All the other trading indicators chew the same number of closing prices.

What kind of indicators does a rookie need at the start?

The initial set of indicators for trading looks boring, and that's right. Two devices from different groups cover both of the questions that a beginner needs an answer to: where the market is going and if it's too late to go in right now.

1. It's a trend filter. EMA 200 or the price channel. He answers one question: are we with the market now or against it? In support, we answer "where to start" exactly this way: remove the excesses from the chart and leave one or two components, most often a price channel or EMA 200.
2. The oscillator. RSI or stochastic. It shows if the price has gone too far to enter right now.

It's all right. No Ishimoku, no Fibonacci and no three screens in the first week. TradingView itself in the reference advises the newcomer to do the same: study the indicator before applying and start with a few keywords instead of trying to cover everything at once.

The order of addition is also important. You look at a nude chart for a week with one trend filter, then you add a second device, and you look at another week. Put them both together and you won't know what helped.

One mistake should be mentioned separately. People pick indicators for their trading from other people's "top 10" selections. That's usually 6 out of 10 oscillators because they're easier to describe. What it looks like on the chart, we'll look at in a separate article about A selection of what's most commonly put on the chart.

How many indicators should I keep on the chart?

John Bollinger, the author of the eponymous strip, wrote a separate rule about this in his "22 Rules" on his own website. The wording is short, but it covers half the beginner's questions about how many devices to keep on the chart:

«If more than one indicator is used the indicators should not be directly related to one another. For example, a momentum indicator might complement a volume indicator successfully, but two momentum indicators aren't better than one.»

John Bollinger, rule 4, by bollingerbands. com

Meaning: Indicators should not be directly linked. The impulse perfectly matches the volumetric, and two impulses are no better than one.

It has a scientific name, multicollinearity. StockCharts defines it as simple: you take the same type of information multiple times without even noticing it. The same example - RSI, CCI, and Williams %R show the same thing. Three indicators, the same answer.

Russian-language forums make the same point more sharply. Nikolai Skrigan wrote on Smart-Lab: “Having many indicators is like having many clocks that all show different times.” In the same discussion, the user LogikoMen explains why: “The problem is not the indicators. It is that they are built on the same mathematical model.”

The practical anchor is TradingView itself. Official page of tariffs, line "Indicators per chart":

Two free-to-play slots is a good indication of how many trading indicators to keep. One hand holds the direction, the other is looking for the moment. You still don't have any more hands.

How to set the indicator to the chart in TradingView?

The platform reference sends you to the same place: the indicator dialog lives on the top panel, then you choose the built-in or the user dialog. The order is the same for any indicator for trading:

1. Open the chart for the asset you need.
2. Click "Indicators" on the top panel.
3. Enter a name in the search, like RSI.
4. Click on the line in the list. The indicator will be on the chart or in a separate panel at the bottom.
5. Enter his name above the chart and click the sixth, period and level.
6. The excess is cleaned with a cross next to the name.

Two things you stumble on the first day. The trend indicators are drawn on top of the candles, the oscillators are drawn in a separate window under the chart, and that's okay. And the settings are applied to a particular chart, so you're going to have to reset them on another asset.

How do you adjust the indicator for yourself: period and timeframe?

There's basically two adjustment handles: period and timeframe. Indicator period - is how many last candles he counts. RSI: 14 counts by 14. If you cut it down to seven, the line will be long and it'll start flying more frequently into the extreme zones.

If you increase it to 21, it'll be smoother and quieter.

Bollinger makes it clear that default values are not sacred: 20 periods and two standard deviations are only starting settings. He also provides a disciplined way to adjust the period: when lengthening the average from 20 to 50 periods, raise the deviation multiplier from 2 to 2.1; when shortening it to 10 periods, reduce the multiplier to 1.9.

The C. The timeframe Beginners sometimes ask, “Why buy on the five-minute chart and sell on the hourly chart?” Different timeframes can point in different directions; this is normal market behavior. Use a hierarchy: assess direction on the higher timeframe and look for entries on the lower timeframe.

The point of starting on M5 is to avoid unnecessary complexity. Another practical rule from our support team is not to add higher timeframes until the entry algorithm has been repeated reliably twenty times. Master one regime first, then add complexity.

Why does the indicator give false signals?

False signal It's the normal state of the device, not a sign that you've been deceived. The device doesn't break or lie: it honestly counts by its formula, and the formula by definition only sees what's already happened on the chart. And then there's three reasons why the signal's moving away from the market.

The first one: Delayed. The indicator is calculated on a closed bar, so it reacts after the fact. On the MQL5 forum, Alexander Green used a memorable analogy: a trader focused on an indicator signal can resemble a driver approaching a controlled intersection while looking back at the previous traffic light. In a follow-up discussion about lag, LeoV states the mathematical reason: every indicator is a transformation, and every transformation distorts the original signal.

The delay dispute is false. Less delay means more noise, less noise means more delay. The same ChartSchool: EMA is less late and therefore more sensitive to fresh prices. And a fair verdict doesn't necessarily make one better than the other. You have to choose the length of the delay for your timeframe.

The second is the market regime. It's the same device in the trend and the floppy reads the opposite. Wilder considered the RSI to be above 70 overbought, but the same study warns that overbought is a sign of strength, and in a strong bear divergence trend, it's commonplace and easy to get caught. Constance Brown specified the ranges: in the bull market, the RSI is usually between 40 and 90, in the bear market, between 10 and 60.

How it costs money, the author of the article honestly described on vc. ru: "The RSI was 80+, and 'by textbook' it meant: it's time to sell. I shortened it to $700, and a week later it grew another 30%".

Third, the loneliness of the device. When the oscillator goes overheating on its own, without confirmation, it's almost always a false start. So in Midas, overheating is calculated by six oscillators at a time: the signal becomes the moment they come together. A detailed account of one such case - in the article Why isn 't one oscillator enough to enter a trade?.

What is a redrawing of the indicator and how do you check it?

Fear is understandable: the signal was there, you saw it, and a minute later it's gone. The official documentation of Pine Script defines What do you mean? So the script counts and draws on stories differently than it does in real time. And he adds a figure that's often derided: more than 95 percent of the existing indicators are being redrawn in one way or another.

Before you get angry, read the following line of the same documentation: "Commony [sic] used indicators such as MACD and RSI, for example, show confirmed values on historical bars, but will fluctuate on a realtime, unconfirmed chart bar until it closes". So the RSI and MACD are also "repainting" until The candle It's not closed. We respond exactly the same way in support: while the candle is still forming, the signal can change or disappear, and that's okay.

The actual redraw looks different: the indicator switches signals that have already happened to make the story look beautiful. A machine like this has a perfect past and no future.

It takes five minutes to check the indicator for a redrawing trade:

1. Put an indicator on it and write down the time and price of the new signal.
2. Wait for the candles to close.
3. Update the page and compare. The signal in place is an honest device. The signal went to another candle. Throw it away.
4. Look at the story separately: if you don't see a single loss signal on the chart, you're in for a run into the past.

The iron rule that eliminates most complaints: the signal is only counted on a closed bar.

How do we get a working set of indicators?

The indicator itself doesn't open the trade, it's the entry rule. It's called "two out of three". It's allowed when at least two out of three conditions match.

1. The price is in the area of interest. Level, channel boundary, EMA, bounce or repeat test. Entrance to the already-flown price is considered late.
2. The signal matches the context of the higher timeframe. For scalping, these are 15m and 1H; for intraday trading, 1H and 4H; and for swing trading, 4H and 1D. Beginners are better off skipping signals that run against the higher-timeframe context.
3. There's confirmation of market reaction. Step away from the level, Breakout With the retest, the volume, the signal of the lower unit.

It's zero or one condition, no trade. The set of indicators from the system differs precisely by this rule.

And then there's two things that you can't see on the chart, but without them, the set is useless. Stop and lose. It's based on volatility, not "in the blink of an eye": the wider the price goes, the further it goes, or it'll hit it with a stick. The risk per trade is 1-2% of the deposit. It's boring, but that's what separates those who trade in a year from those who don't.

Divergence It often becomes the next step after the basic set, and we process it separately: What is the difference between price and oscillator?. And for those who trade fast, it's worth a look. which indicators are suitable for scalping - there's a very different set of delay requirements.

How do you test a story indicator without believing a word?

Check here one, and do it before the first live trade. Background It's checking the rules on history: either with a built-in tester, or with your hands, scrolling the chart backwards and marking the entries according to your rules.

The main trap is called data snooping, history-tracking. You rotate the RSI period from 14 to 9, then to 21, then levels from 70/30 to 75/25 - until past trades are profitable. The Academy addressed exactly this issue: Sullivan, Timmermann, and White (1999) expanded Brock's set of 26 rules and ran the set of 100 years of Dow Jones daily data to see if the "best rule" was simply the luckiest of the selected ones.

That's what science knows. The biggest breakthrough, Park and Irwin (2007), brought together 95 studies: 56 of them gave the technique a plus, 20 a minus, and 19 more gave it both. It also lists the weaknesses of these tests, including the same setup. Lo, Mamay and Wang (2000) formulate it more accurately: several technical indicators actually add information and can have practical value.

Separately about the winning indicators for trading, because it's the most manipulated number in the niche.

The built-in Midas tester shows an average of 50–55% when every signal is taken consecutively and without filtering. On some asset/timeframe combinations with well-chosen settings, the tester showed up to 70%. This figure measures settings quality and helps compare configurations; it does not predict future results. Win rate alone is not the same as profitability: a 54% win rate with a 1:2 risk/reward ratio may be profitable, while a 70% win rate with poor risk management may lose money. Past results do not guarantee future results.

So don't believe anyone else's reversal, not even ours. Get your numbers on your market and your timeframe.

Do the indicators work on crypto and forex?

Math doesn't know what asset she's been given. RSI, moving average and ATR are calculated equally on Bitcoin, on Savings Bank stocks and on the euro-dollar pair. The nature of the market is changing: the speed of movement, the size of the gaps, the time of activity.

There's one exception to the rule. The horizontal volume profile and the thermal liquidity map on currency pairs are not displayed: forex does not have standard exchange volumes, trades go through many platforms. In crypto and stocks, these tools work, in forex, they're replaced by levels, channels and oscillators.

The second difference is the trading schedule. Crypto trades around the clock, so a daily bar closes at a fixed exchange time rather than at the end of a session. Stocks can gap after weekends, and Levels They behave differently around them. Select settings for each market separately, but the set remains the same.

Risks and Restrictions

Figures that are helpful to keep in mind. The European regulator ESMA in an official 2018 release gives a range: 74-89 percent of retail accounts typically lose money on their investments.

A study of the Brazilian market (Chague, De-Losso, Giovannetti, 2019) found that 97% of those who day-traded for more than 300 days lost money, and added an observation worth emphasizing: there was no evidence of learning through day trading. Time at the terminal alone teaches nothing; reviewing your own trades against fixed rules does.

What the indicator doesn 't know in principle:

• It doesn't predict. He describes the past, no matter how difficult the calculation.
• It doesn't manage the risk. The size of the position, the stop and the permissible landing are human decisions.
• It doesn't cancel the news. A report, a stock market breach, or a regulator's decision breaks any formula.
• It doesn't give an entrance with 100% accuracy. We have this written directly in the reference book Signal is a reason to open the chart and go through the checklist. You're the one who gives the entrance command.

A separate note on Midas tools, to avoid inflated expectations. Signals arrive at bar close with a small delay; their purpose is to catch the beginning of a wave. A liquidity zone is a potential magnet, but price is not required to reach it. There is no automated trading or copy trading: all trading is manual.

And look at the section about, How to calculate the risk of a trade before entering And without that, any set of indicators is working perfectly.

It's very important. The material is informative. It is not an individual investment recommendation. The market is volatile, trade is risky. Past results do not guarantee future results.

Sources

• John Bollinger, "22 Bollinger Bands Rules", the author's official website - https://www.bollingerbands.com/bollinger-band-rules
• StockCharts ChartSchool, Multicollinearity section - https://chartschool.stockcharts.com/table-of-contents/overview/multicollinearity
• StockCharts ChartSchool, Relative Strength Index (RSI) - https://chartschool.stockcharts.com/table-of-contents/technical-indicators-and-overlays/technical-indicators/relative-strength-index-rsi
• StockCharts ChartSchool, Average True Range (ATR) - https://chartschool.stockcharts.com/table-of-contents/technical-indicators-and-overlays/technical-indicators/average-true-range-atr
• StockCharts ChartSchool, Moving Averages - https://chartschool.stockcharts.com/table-of-contents/technical-indicators-and-overlays/technical-overlays/moving-averages-simple-and-exponential
• TradingView, Pine Script documentation, “Repainting” section - https://www.tradingview.com/pine-script-docs/concepts/repainting/
• TradingView, reference "TradingView indicators: simple steps to get started" - https://www.tradingview.com/support/solutions/43000543626-tradingview-indicators-simple-steps-to-get-started/
• TradingView, tariff page (line "Indicators per chart") - https://www.tradingview.com/pricing/
• Park C.-H., Irwin S. «What do we know about the profitability of technical analysis?», Journal of Economic Surveys, 2007 - https://experts.illinois.edu/en/publications/what-do-we-know-about-the-profitability-of-technical-analysis/
• Sullivan R., Timmermann A., White H. «Data-Snooping, Technical Trading Rule Performance, and the Bootstrap», Journal of Finance, 1999 - https://ideas.repec.org/a/bla/jfinan/v54y1999i5p1647-1691.html
• Lo A., Mamaysky H., Wang J. «Foundations of Technical Analysis», NBER Working Paper 7613, 2000 - https://www.nber.org/papers/w7613
• ESMA, press release of 27.03.2018 on retail account risks - https://www.esma.europa.eu/press-news/esma-news/esma-agrees-prohibit-binary-options-and-restrict-cfds-protect-retail-investors
• Chague F., De-Losso R., Giovannetti B. «Day Trading for a Living?», University of São Paulo, 2019 - https://ideas.repec.org/p/spa/wpaper/2019wpecon47.html
• Nicholas Scrogan, "How many indicators do you need for happiness?" Smart-Lab - https://smart-lab.ru/blog/736994.php
• Alexander Green, branch of the Best Indicator, MQL5 Forum - https://www.mql5.com/ru/forum/168724
• LeoV, branch "Non-latency or low-latency indicators", MQL5 forum - https://www.mql5.com/ru/forum/106448/page2
• Kryptons, "RSI trading indicator: the instrument that leaked me a deposit - and helped get it back", vc. ru - https://vc.ru/crypto/2228580-indikator-rsi-v-treydinge
• J. Welles Wilder, "New Concepts in Technical Trading Systems", 1978 - first source for the RSI and ATR
• Constance Brown, "Technical Analysis for the Trading Professional", 1999 - RSI working ranges in the bull and bear market

Frequently asked questions

Which indicators are considered the best?

The best trading indicator is the one that suits your task and style. Any top-10 selection is a foreign selection under a foreign timeframe and a foreign market. Working criterion one: the indicator is clear to you, it's in the right group, and it doesn't repeat what's already on the chart. Check it on your own historical data, not your pretty screenshots.

How does the oscillator differ from the trend indicator?

The trendy one answers the question "where", the oscillator answers the question "how far". The moving average shows direction and serves as a dynamic level. The RSI or stochastic indicates if the traffic is overheating right now. So they work well in pairs and badly when you put two devices of the same type and expect independent confirmation from them.

Can we only trade by indicators?

You can if, in addition to trading indicators, you have entry rules, stops, position size and discipline to follow them. The indicator in this diagram only closes one point out of four. A naked signal without rules turns into a lottery. Practitioners and academics talk about it the same way. As a rule, once checked strictly, the beautiful profitability of it goes away.

How much do the indicators cost and are they free?

TradingView's built-in indicators are free, hundreds of them, and that's enough to get you started. It makes sense to look at paid scripts when you already know exactly what you're missing. The free plan limit is two indicators on the chart; the rest is convenience: multiple charts in one window, alerts, more slots.

Why does the indicator show different times on different timeframes?

Because the trading indicator counts by the candles of the timeframe it's on. On the M5 he sees the movement of the last hour or two, on the D1 - the last months. Divergence of directions is the norm. It's all in the order: you look at the direction in the higher-timeframe timeframe, you look at the entry in the lower-timeframe one, and you miss the signals against the higher-timeframe context.

Do you need a paid TradingView plan to use the indicators?

For basic work, no: there are built-in indicators and two slots on the chart available for free. The pay rate is needed when slots are short, multiple chartics in one window or alerts to the messenger are required. You can learn about it and start trading for free.