Monday, 13 June 2011

Why do traders use indicators?

We will look at Oscillators as an example.

Oscillators comprise a section of indicators that enclose the myriad array of price action into a new reading after calculations have been added.

The initial development was probably attributable to the trouble of distinguishing a peak or bottom in the markets.

Whilst we might have intellectual conceptions of what is a peak or bottom in a normal day's trading, the explosive and helter-skelter nature of trading entails that any peak could well be replaced by another one.  That's the nature of the markets. Fans of indicators believe that prices without confirmation can be a poor indicator in calling tops and bottoms. traders who use oscillators believe they help work around this challenge by distinguishing levels that give a  clue as  to potential highs or lows.a

No comments:

Post a Comment