Master technical analysis with our comprehensive guides on trading strategies and indicators. Educational content for informed decision-making.
Learn proven approaches to market analysis and timing
Understand the 10 most powerful indicators and how to use them
Confluence trading involves waiting for multiple technical indicators to align before entering a position. This approach significantly increases probability of success by requiring confirmation from various independent sources.
Best For: Patient traders seeking high-probability setups with lower risk
"The trend is your friend" - this strategy involves identifying the dominant market direction and trading in alignment with it. Trend followers aim to capture large moves by staying in positions during sustained directional movements.
Best For: Traders who can hold positions through volatility and avoid overtrading
Mean reversion assumes that prices tend to return to their average over time. This strategy involves buying oversold conditions and selling overbought conditions, expecting price to revert to the mean.
Best For: Range-bound markets and shorter timeframes with defined support/resistance
Breakout trading involves entering positions when price breaks through established support or resistance levels with strong momentum. These breakouts often lead to significant directional moves.
Best For: Volatile markets and traders comfortable with fast-moving positions
Swing trading aims to capture short to medium-term price movements over days to weeks. This approach focuses on identifying "swings" in market sentiment and momentum.
Best For: Part-time traders who can't monitor markets constantly
Position trading is a long-term approach focusing on major market cycles and fundamental trends. Traders hold positions for weeks to months, ignoring short-term volatility.
Best For: Patient investors seeking to capture major market cycles
RSI measures the speed and magnitude of price movements on a scale of 0-100. It identifies overbought and oversold conditions, helping traders spot potential reversals.
Best Timeframe: Works on all timeframes, most effective on daily charts
MACD shows the relationship between two moving averages, revealing both trend direction and momentum strength. It consists of the MACD line, signal line, and histogram.
Best Timeframe: Daily and 4-hour charts for swing trading
Moving averages smooth out price data to identify trend direction. Simple Moving Average (SMA) gives equal weight to all prices, while Exponential Moving Average (EMA) emphasizes recent prices.
Popular Periods: 20 (short-term), 50 (medium-term), 200 (long-term)
Bollinger Bands consist of a middle band (20 SMA) and two outer bands set at 2 standard deviations. They expand and contract based on market volatility, showing overbought/oversold conditions.
Best For: Mean reversion strategies in ranging markets
The Stochastic Oscillator compares a closing price to its price range over a period, showing momentum and potential reversal points. It consists of %K (fast) and %D (slow) lines.
Best Timeframe: Shorter timeframes (1H, 4H) for swing trading
Volume measures the number of shares or contracts traded during a period. It confirms the strength of price movements and validates breakouts, making it essential for all trading strategies.
Key Principle: Volume should confirm price action - divergences signal caution
Support and resistance are price levels where buying or selling pressure historically causes price to reverse. These levels represent psychological barriers and areas of supply/demand imbalance.
Pro Tip: Horizontal levels work best, but also watch trendlines and moving averages
Fibonacci retracements use mathematical ratios (23.6%, 38.2%, 50%, 61.8%, 78.6%) to identify potential support and resistance levels during pullbacks in trending markets.
Best For: Identifying entry points during pullbacks in strong trends
ATR measures market volatility by calculating the average range between high and low prices over a period. It doesn't indicate direction, but shows how much an asset typically moves.
Key Use: Risk management - helps size positions and set appropriate stops
OBV is a cumulative indicator that adds volume on up days and subtracts volume on down days. It shows whether volume is flowing into or out of an asset, often leading price movements.
Key Insight: Smart money shows up in volume before price - OBV reveals this early
No strategy or indicator guarantees success. Proper risk management is the difference between long-term success and account destruction. Always follow these principles:
If you have £10,000, risk only £100-200 per trade. This ensures you can survive losing streaks.
Define your exit before entering. Place stops below support (longs) or above resistance (shorts).
Target at least 2:1 reward-to-risk. If risking £100, aim for £200+ profit.
Don't put all capital in one asset or strategy. Spread risk across multiple uncorrelated trades.
Document every trade: entry, exit, reasoning, emotions. Review regularly to improve.
Fear and greed destroy accounts. Stick to your plan, accept losses, and avoid revenge trading.
Educational Content Only: This information is for educational purposes and does not constitute financial advice. Trading involves substantial risk of loss. Always conduct your own research and consider consulting with a qualified financial adviser before making investment decisions.