How to Choose Your Technical Indicators

In a trending market, prices move consistently in one direction, either up or down, making trend-following indicators like moving averages, MACD, and ADX useful.  

In a sideways or channeling market, where prices oscillate between support and resistance levels, oscillators like RSI and stochastic can help identify overbought and oversold conditions. Choosing the right indicator starts with recognizing the market environment you’re trading in. 

While technical indicators are valuable tools, sometimes the best insights come from simply notating the chart with hand-drawn tools. Drawing trendlines and price channels can help identify the overall market direction, while Fibonacci retracement levels highlight potential support and resistance zones where price may react.  

By manually marking key levels and patterns, traders can develop a deeper understanding of market structure beyond what indicators alone can reveal. In a noisy market, taking the time to visually assess price action and notating the chart rather than relying solely on preset formulas may improve decision-making and uncover opportunities that otherwise might be overlooked. 

Consider Your Timeframe and Style 

Selecting the right indicators is just the first step—fine-tuning each indicator for market conditions and your trading style are equally as important. Every indicator comes with user-defined input parameters that adjust the amount of data the indicator is using to calculate. 

Determining which values to use for these input parameters depends on market conditions and the type of trading you're doing. For day traders in fast market conditions, inputs are usually set to lower values to capture the most recent relevant activity in real time. Longer-term traders generally look at higher values for these input parameters to get a more macro view of the market for long-term trends and key support resistance levels. 

Intraday vs Longer-Term Analysis 

For example, on intraday charts, traders may look at 5-, 8-, or 13-bar moving averages. For longer-term analysis, traders may use 20-, 50-, or even 200-bar moving averages. It’s important to note here that the bar interval of the chart also serves as a way of adjusting indicator calculation timeframe, so you can fine-tune your analysis for your type of trading. 

Whether you're looking at 5-minute, 30-minute, daily, weekly, or monthly charts, as indicators calculate bar by bar, they can provide a powerful visual analysis of the market action. 

Combine Indicators for Best Results 

Although you don’t want to overcomplicate your analysis, most indicators work best in combination with other similar indicators to confirm trends, turning points, support resistance levels, and ultimately, your trade setups. Finding the right combination of indicators for your trading style can be challenging and rewarding at the same time. 

Market Matchmaking 

All futures markets have distinct personalities; some markets can be more volatile, while others are quiet and steady. Determining which market fits your personality will help you determine which indicators you should utilize. 

There are some indicators designed primarily for the futures markets, including the commodity channel index (CCI), floor trader pivots, VWAP, Ichimoku Cloud, and Commitment of Traders (COT). Used alone or in combination, these are the same indicators professional traders use every day.  

Get Unlimited Analysis Potential With NinjaTrader 

The great news is that NinjaTrader has the entire universe of technical analysis built into our trading platforms, and along with our NinjaTrader Ecosystem partners, we provide a plethora of advanced indicators and strategies—so there’s no limit to where your analysis can take you.