I just saw someone ask in the group: what are the stock indicators they see in various apps used for? Right here, I’d like to share the knowledge I’ve accumulated, because many people may still not really understand what they are.

Put simply, stock indicators are tools that help us analyze stock prices by taking numerical data and calculating it using mathematical formulas, so we can see trends, volatility, or price swings more clearly. These numbers are directly related to the actual price, trading volume, and trading indices in the real market.

Based on my experience, stock indicators mainly come in 3 types that are used the most.

The first type is Trend Following Indicators, which help us understand the direction of a stock’s movement. For example, MACD, Moving Average, or SAR. This type is easy to use because you can understand it just by looking at how the chart changes—it’s not hard at all.

The second type is Momentum Indicators, which measure the momentum of price. Their values often fall between 0 and 100. These help us tell whether the market is Overbought (bought too much—there may be a selling wave coming back) or Oversold (sold too much—there may be a buying wave coming back). Examples include RSI, CCI, or Stochastics.

The third type is Volatility Indicators, which measure price volatility. If prices move up and down a lot, it can be an opportunity for us to make a profit. Examples include ATR, Bollinger Bands, or Historical Volatility.

As for the advantages of using stock indicators, as I see it, they help beginner traders understand the market better and form principled guidelines for making buy and sell decisions. They can also improve trading strategies, because we’ll be able to see better opportunities and reduce risk.

However, stock indicators do have drawbacks. The first issue is that many people trust them too much and set up automated trading with them. The result is missing opportunities or incurring losses, because the market doesn’t always behave as expected. The second issue is that indicators aren’t 100% accurate. Sometimes we set a sell point, but the price keeps going up. The third issue is that the same tool may produce different results when used on other stocks, and even two different tools can give conflicting signals.

In reality, stock indicators are only tools for help—not a guaranteed key to making profits. There are traders who use many indicators at the same time and still get confused, but there are also people who don’t use indicators at all and can still make good profits.

Personally, I think stock indicators should be used as part of a strategy, not everything. Combine them with the company’s fundamental analysis, look at support and resistance levels, and also include your own experience. If you’re a long-term trader, use Trend Following; if you’re trading short-term, use Momentum or Volatility depending on what you’re comfortable with.

Trading stocks isn’t easy, but if you understand stock indicators and use them appropriately, they can help increase your chances of success. Do any of you use a particular indicator you like? Feel free to share your experiences!