Three families of indicators

If indicators held a family reunion, they would sit at three tables. At the first sit those who follow the direction. At the second those who measure speed and keep fidgeting. And at the third those who count people. Almost every indicator in the menu has a seat at one of them.

Trend: where it is going#

Trend indicators have the same units as the price, so they are drawn over the candles – on Binance under the Main Indicator tab. They include averages (MA, EMA, WMA), Bollinger Bands (BOLL), VWAP, Parabolic SAR and Supertrend. They answer: which way is the market moving and where is the "normal" price?

Oscillators: how fast#

An oscillator swings within a range, often 0 to 100, and has its own panel below the chart (the Sub Indicator tab). It includes RSI, StochRSI, KDJ, Williams %R, CCI and MACD. They answer: how fast and how "stretched" is the move?

Volume: how many people#

Volume indicators count how much was traded: VOL, OBV and MFI (which is half an oscillator). They answer: is there a crowd behind the move, or a few random trades?

Here is one member of each family on one chart:

Same family = same answer#

RSI, StochRSI, KDJ and Williams %R compute almost the same thing – just with a different equation. When all four show "overbought", you do not have four confirmations. You have one piece of information four times. It is like asking four people the way when they all look at the same map.

A real second opinion only comes from an indicator of another family: trend asks about direction, an oscillator about speed, volume about participation.

Common myths#

• "When RSI and KDJ say the same thing, it is certain." They measure the same thing, so they almost always agree.
• "MACD is a trend indicator, so it belongs over the candles." MACD follows averages, but it is drawn in a panel like an oscillator.
• "Volume is boring." Volume is the only common indicator that does not stand on the price alone.