My top 10 best indicators for day trading

Struggling to choose the right tools for your intraday trading setup? In this article, Antreas Themistokleous reveals his 10 best indicators for day trading that help him cut through the noise, manage risk, and capitalize on fast market moves.

In the world of trading, where endless opportunities arise at different times and information is so abundant, it's easy to feel overwhelmed trying to figure out what and when to trade. In this guide, I’ll walk you through the best indicators for day trading that have helped me stay ahead and adjust my trading strategy in volatile markets.

Introduction to day trading indicators

What is day trading?

Day trading is a short-term trading strategy in which traders and investors buy and sell financial instruments like stocks, cryptos, currencies, and commodities within the same trading day. For example, I buy gold in the morning and close my position by the end of the trading day. 

I chose this timeframe for trading for several reasons. One key reason is to profit from volatility, as I can take advantage of intraday trading fluctuations using leverage for quick gains. I also engage in high-frequency trading, executing multiple trades throughout the day to accumulate profits. Additionally, day trading helps me manage risk by ensuring that all my positions are closed before the market shuts down, protecting me from overnight risks and large swap fees. Another important objective is liquidity—I focus on highly liquid assets, such as cryptocurrencies or gold, to ensure smooth entry and exit points without delays.

The role of technical indicators in day trading

As we discussed above, day trading (or intraday trading) is a very short-term trading strategy. But how do you navigate this dynamic environment to build a plan and filter out the “noise” in the markets? One way is to utilize the benefits of technical analysis and, more specifically, the use of technical indicators. Technical indicators tend to “guide” traders by simplifying the market dynamics,  filtering out all unnecessary information by looking at a simple chart. 

 Trading indicators help me identify market trends, provide entry and exit points, and improve my risk management. Tools like Moving Averages (MA) reveal trend direction and strength, which assists me in aligning my strategies with market conditions. 

Relative Strength Index (RSI) and Bollinger Bands highlight any overbought or oversold conditions and breakout levels. These help me optimize the timing of my trades so that I avoid opening a buy position at tops or vice versa. 

The Average True Range (ATR) measures volatility for setting my stop loss levels, while volume indicators confirm price movements, reducing the false signals. 

Understanding technical analysis in day trading

What is technical analysis?

Technical analysis (TA) is a method used by traders and investors to evaluate and forecast price movements based on historical market data, primarily price and volume. Instead of analyzing a company’s financial health or economic factors (as in fundamental analysis), TA focuses on identifying patterns, trends, and statistical signals to make trading decisions. I personally use technical analysis extensively across all financial markets because I can use the same principles in every chart. 

When trading forex, I use chart patterns and technical indicators such as the RSI, MACD, and Moving Averages to help identify support and resistance levels and execute breakout or momentum strategies. 

For stock trading, TA assists in identifying entry and exit points based on price action and volume. Here, I find Bollinger Bands, Fibonacci Retracements, and Moving Average crossovers quite useful. However, when trading stocks, I also apply fundamental analysis because I need to see the financial image of the company I want to trade to make sure that it's healthy and has more potential to move up. 

Lastly, when crypto trading, I find the combination of TA with on-chain analysis is vital because of the high volatility and a lack of traditional valuation metrics. 

Why use technical indicators for day trading?

Technical indicators help me identify trends, momentum shifts, and entry/exit points, making trading more data-driven and efficient. Tools like Moving Averages, RSI, and MACD provide objective signals, reducing emotional decision-making.

However, market psychology also influences price movements. Relying solely on indicators can lead to false signals, so I balance technical tools with an understanding of sentiment and price action.

A successful strategy combines indicators with market awareness, ensuring adaptable and well-informed trading decisions. The key is using trading indicators strategically rather than overloading with too many signals.

Top 10 best indicators for day trading

1. Moving Average (MA)

A Moving Average is a method of calculating the average value of an instrument's price over a specific period of time. The term ‘moving’ implies that the average changes or moves. When calculating the MA, a mathematical analysis is made of the instrument’s average value over the predetermined time period.

A simple Moving Average is calculated by adding the closing price of the instrument for a number of time periods (e.g., 10 days), and then dividing this total by the number of time periods. The result is the average price of the instrument over the time period. As the instrument’s price changes over time, its moving average also changes accordingly. 

The general concept is that when prices fall below the moving average, there might be a potential sell signal, and when they rise above, there is a potential buy signal. 

2. Exponential Moving Average (EMA)

The method used to calculate an Exponential Moving Average puts more weight on recent data and less weight on past data than the Simple Moving Average does. An exponential, or exponentially weighted, moving average is calculated by applying a percentage of today’s closing price to yesterday’s moving average value. The benefits of the EMA over the SMA are mainly the method used with EMA applying a higher weight to recent prices, reducing the impact of older prices, and lower lag. Since recent data has more influence over the EMA, it reacts faster to new trends compared to SMA and might be better for trend following, especially in strategies that require quick reactions to changing market conditions.

3. Moving Average Convergence Divergence (MACD)

The MACD is a trend-following momentum indicator that shows the relationship between a price’s two moving averages. It consists of three main components:

MACD line = EMA(12) - EMA(26). This shows the difference between the short-term and long-term EMAs.

Signal line = EMA(9) of the MACD line. This is a smoother version of the MACD line used to generate buy/sell signals.

Histogram = MACD line - signal line.  Represents momentum strength with larger bars indicating stronger trends.

The general interpretation of using the MACD is that when it falls below its trigger line or otherwise has a bearish crossover, it's a potential sell. When it rises above the trigger, or a bullish crossover, it is a potential buy signal. Another use is to identify the divergences of the MACD. Bullish Divergence is when the price creates lower lows, but the MACD makes higher lows → possible bullish reversal. On the other hand, a bearish divergence is when the price reaches higher highs, but the MACD makes lower highs → possible bearish reversal. 

4. Relative Strength Index (RSI)

The RSI indicator is a price-following oscillator that ranges between 0 and 100. Usually, when the RSI is above 70 or falls below 30, it is considered overbought and oversold, respectively. A popular method of analyzing the RSI is to look for a divergence in which the market index is making a new high, but the RSI is failing to surpass its previous high. This divergence would be an indication of an impending reversal. When the RSI then turns down and falls below its most recent high, it is said to have completed a failure swing. The failure swing would be considered a confirmation of an impending reversal. 

5. Bollinger Bands

Bollinger Bands are a type of envelope developed by John Bollinger. However, envelopes are plotted at a fixed percentage above and below a moving average, and Bollinger Bands are plotted at standard deviation levels above and below a moving average. Standard deviation is a statistical concept that describes how prices are dispersed around an average value. Using two standard deviations ensures that 95% of the price data will fall between the two trading bands and thus help identify market volatility. The general concept around the Bollinger Bands is that if prices bounce off the lower band and cross above the 20-period average, the upper band becomes the upper price target and vice versa. Bands also expand and contract based on the last 20 days’ volatility. When the bands are unusually far apart, that is often a sign that the current trend may be ending. 

6. Stochastic Oscillator

The Stochastic Oscillator compares where a security’s price closed relative to its trading range over the last x-time periods. It is a momentum indicator that helps identify overbought and oversold conditions, signaling potential price reversals. The Stochastic Oscillator consists of two lines: the %K line (which tracks the current closing price relative to the recent price range) and the %D line (a moving average of the %K line). When the %K line crosses above the %D line, it suggests upward momentum and a possible bullish reversal. Conversely, when the %K line crosses below the %D line, the Stochastic Oscillator signals a downward momentum and a potential bearish reversal. Divergences between price and the oscillator can also indicate weakening momentum and a shift in trend direction.

7. Average Directional Index (ADX)

The Average Directional Index (ADX) measures the strength of a trend, regardless of whether it's upward or downward. It ranges from 0 to 100, where values above 25 indicate a strong trend, and values below 20 suggest a weak or no trend. ADX itself doesn’t indicate the direction of the trend but rather its strength. A rising ADX suggests strengthening momentum, while a falling ADX signals weakening momentum. Typically, I combine ADX with the +DI (positive directional indicator) and -DI (negative directional indicator) to identify the trend's direction. ADX is most effective in trending markets and less reliable in sideways, choppy conditions.

8. Fibonacci Retracement

Fibonacci levels are used to identify potential support and resistance zones where price reversals may occur. The key Fibonacci Retracement levels are 23.6%, 38.2%, 50%, 61.8%, and 78.6%. These are based on the Fibonacci sequence and are drawn between significant price highs and lows.

Support: In an uptrend, the price may pull back to one of the Fibonacci levels before continuing higher. The retracement levels act as potential support zones where buyers might step in.

Resistance: In a downtrend, the price may rally to one of the Fibonacci levels before reversing lower. These levels act as resistance zones where sellers might enter the market.

Fibonacci levels are crucial to my analysis when looking for price action signals (e.g., candlestick patterns) near these levels to confirm potential reversals. Fibonacci levels could also help identify areas where the trend could either continue or reverse.

9. Volume Indicators

Volume is the number of entities traded during the time period under study, and can be plotted when examining up to weekly charts (it's not very useful in monthly charts). Volume should increase in the direction of the existing price trend. In uptrends, it should be heavier as the price moves higher, and in downtrends, it should be heavier during down moves. Volume tends to precede price, meaning it reacts before it actually manifests on the chart. It also confirms price patterns, and that is why volume is a vital part of my strategies. 

10. Parabolic SAR

I use the Parabolic SAR (Stop and Reverse) to help determine potential stop loss points and identify trend reversals. The Parabolic SAR is a trend-following trading indicator that places dots above or below the price chart, depending on the direction of the trend.

• Trend reversals: When the dots flip from above the price to below (or vice versa), it signals a potential trend reversal. A flip from below the price to above indicates a bearish reversal, while a flip from above the price to below signals a bullish reversal.
• Stop loss points: I place stop loss orders just below (in an uptrend) or above (in a downtrend) the Parabolic SAR dots. As the dots adjust with price movement, they can help trail the stop loss, locking in profits as the trend develops.

The Parabolic SAR is most effective in trending markets, but it can give false trading signals in choppy or sideways markets.

Frequently asked questions about these best day trading indicators

Which indicator is the most accurate?

No single indicator is universally accurate, as each one has strengths and limitations depending on market conditions. For instance, moving averages work well in trending markets but can give false signals in sideways markets. Similarly, oscillators like RSI may provide overbought or oversold signals, but they’re less effective in strong trends. The key to more reliable trading lies in using multiple trading indicators for confirmation. By combining trend-following indicators like MACD with indicators for identifying momentum like RSI and support/resistance levels from MAs, traders can filter out false signals and increase the accuracy of their predictions.

How many indicators should you use?

It’s important to avoid overloading your charts with too many indicators, as this can lead to confusion and conflicting signals. A balanced approach is best—typically, using 2-3 complementary indicators is sufficient. For example, combining a trend-following indicator like a Moving Average with a momentum indicator like the RSI and a volume indicator can provide a well-rounded view of market conditions. The goal is to use indicators that confirm each other, rather than relying on too many that may contradict or overwhelm your analysis.

What makes a good trading strategy?

A good trading strategy combines trend, momentum, and volume indicators to create a comprehensive view of the market. Trend indicators like moving averages help identify the overall direction, while momentum indicators like RSI or MACD signal the strength of that trend and potential reversals. Volume indicators confirm the strength of price movements and trends. By using all three types of indicators, traders can make more informed decisions, filter out false signals, and increase the likelihood of successful trades.

Choosing the right indicators for your strategy

How to choose the best indicators for your trading style

Choosing the best indicators for day trading involves testing different options and adjusting based on your personal experience, risk tolerance, and the current market conditions. It’s essential to experiment with combinations that align with your strategy, and regularly reassess your choice of indicators as conditions evolve. The key is finding what works best for your approach and refining it over time.

Final thoughts

Day trading is a journey of constant learning and adaptation. I’m always refining my strategies and staying updated with the best indicators for day trading to stay ahead in fast-moving markets. As conditions shift, I adjust my approach—analyzing which technical indicators are working, which ones aren’t, and how I can combine them more effectively.

The key to long-term success in day trading is flexibility, discipline, and a willingness to test, tweak, and grow. So, if you're serious about improving your performance, start using these indicators on your day trading chart today—and put them to the test on the Exness Terminal. The best way to learn is by doing.