What is the best technical indicator for day trading?
There are various kinds of traders in the stock market. Some, are long-term traders, others, on the other hand, are intra-day or day traders. Depending on the style of trade, it is important to the appropriate indicator.
Day trading is a fast n prompt mode of trading. Fast decision-making skills are needed here.
There are many good technical indicators available for day trading like Moving Averages, Bollinger Bands, Momentum Oscillators etc. However, monitoring too many indicators will not only be time-consuming but will also be counterproductive.
Among all the available indicators we think Relative Strength Indicator, popularly known as RSI is the most efficient to follow for a day trade.
Merging the default 14-period RSI (I.e. looking back 14 bars on the graph to create its reading) with resistance zones while day trading can help one attain a high reward-to-risk ratio.
Theoretically, it is recommended to sell the stocks when the RSI touches 70 and a buy when it falls to 30 however in the case of day trades, it is equally important to analyse the volatility and RSI history before making a decision.