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Course · Trading

Technical Indicators

Calculate and interpret trend, momentum, and volatility indicators, and evaluate indicator rules.

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BASICSTRENDMOMENTUMVOLATILITYSYNTHESIS
Subject
Trading
Lessons
16
Format
Interactive

Overview

Calculate and interpret trend, momentum, and volatility indicators, and evaluate indicator rules.

What it teaches

The transformation itself — lookback, responsiveness, warm-up, context. Trend: simple and exponential moving averages and the crossover filters built on them. What momentum and trend strength actually measure: RSI, the stochastic oscillator, MACD, and the directional-movement family. Volatility and the channels drawn from it: true range and ATR, Bollinger Bands, Keltner and Donchian channels. The reading skills that decide whether any of it helps: rate of change, divergence, redundancy, regime selection, and deterministic rules.

Who it is for

Anyone who has an indicator on their chart and could not, right now, write down its formula or say what makes it lag. It assumes you can read a chart and starts from the calculation, so no prior indicator knowledge is needed. It also suits the reader who has six indicators open and suspects — correctly — that four of them are showing the same thing twice.

Concept dependencies

Moving-average smoothing is the basis of the envelopes that use it. Indicator divergence needs the RSI, stochastic and MACD oscillators. Indicator-Based Trading Rules asks for trend, strength and volatility filters: moving-average trend filters, directional movement, ATR and the Bollinger, Keltner and Donchian channels. Reading, combining and selecting indicators connects their formulas to context.

Lessons

Explanations, examples, interactive tools, and practice questions.

16 lessons

Educational use only — nothing here is trading advice. This course teaches indicator calculation, interpretation, and rule specification. It does not provide live data, trading signals, profitability claims, or personalized investment advice. Backtesting and Trading Systems covers backtesting, costs, and robustness; Algorithmic and Automated Trading covers automation.

Calculation scope. Every price series in these lessons is a deterministic synthetic example. The course uses standard conventions — an equal-weight rolling window for the SMA, an EMA seeded with the first complete SMA, Wilder smoothing for RSI, ATR and ADX, a population standard deviation for Bollinger Bands, and a prior completed channel for Donchian breakout signals. Small differences from charting platforms can occur because of source, seed, rounding, missing-bar, adjustment, or incomplete-bar conventions. Indicators transform historical price data; they do not guarantee future direction.

Lesson topics

Foundations

What an indicator actually is before any of them has a name: a formula applied to bars you already have. Why the lookback you pick is the whole trade-off between responsiveness and noise, why every indicator has a warm-up period during which it has nothing to say, and why the same reading means different things in different market context.

None of the 16 lessons marked complete

  1. WARM-UP INDICATOR
    Foundations Interactive lab

    Technical Indicator Fundamentals

    Reconstruct an indicator value from the bars it was computed from, predict how a longer or shorter lookback changes its responsiveness, identify the warm-up period during which it has no value, and state what market context a signal still needs.

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Lesson topics

Trend

Moving-average smoothing supports the trend filters and the envelopes that use it. Two ways to average a price series and what changing the source or the lookback does to each; then the trend-state model you get by putting a fast average against a slow one — including the whipsaws it produces, and the difference between a rule that confirms late and a prediction that arrives early.

  1. EMA TRACKS CLOSER SMA LAGS
    Trend Interactive lab

    Simple and Exponential Moving Averages

    Calculate and compare simple and exponential moving averages, inspect how input source and lookback affect responsiveness, and state when the faster response helps and when it hurts.

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  2. CROSS UP WHIPSAW CROSS DOWN
    Trend Interactive lab

    Moving Average Trend Filters and Crossovers

    Use fast and slow moving averages as a trend-state model, detect crossovers, measure whipsaws, and distinguish a delayed confirmation rule from an early reversal prediction.

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Lesson topics

Momentum and trend strength

Four more readings of the same bars. Three of them are momentum measures — RSI, the stochastic, and MACD — and the fourth is not: the directional-movement family separates which side is dominant from how strong the move is at all. These lessons are about thresholds, and about why a level that means "stretched" in a range means "trending" a week later.

  1. 30 OVERSOLD 70 STAYS HIGH
    Momentum Interactive lab

    Relative Strength Index

    Calculate RSI with Wilder smoothing, interpret momentum on a 0–100 scale, test threshold behavior across regimes, and avoid treating overbought or oversold as automatic reversal commands.

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  2. HIGH CLOSE LOW %K AND %D RANGE POSITION
    Momentum Interactive lab

    Stochastic Oscillator

    Measure where the close sits inside its recent high-low range, compare %K and %D smoothing, and explain from the formula why range position pins near an extreme in a trend and turns in a sideways market.

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  3. MACD SIGNAL HISTOGRAM ZERO LINE
    Momentum Interactive lab

    Moving Average Convergence Divergence

    Separate the MACD line, signal line, and histogram; change the three periods; identify zero-line and signal-line events; and name what each component measures.

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  4. +DI −DI DOMINANCE ADX TREND STRENGTH
    Trend strength Interactive lab

    Average Directional Index and Directional Movement

    Calculate +DI, −DI, and ADX; distinguish directional dominance from trend strength; adjust the lookback and threshold; and compare the indicator in trending and ranging price series.

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Lesson topics

Volatility and channels

How far price moves, kept strictly separate from which way it moves. True range and the ATR built on it describe volatility measurement. The channels use distinct estimates: standard deviation around an average, an ATR envelope around an EMA, and the pure high-low channel that needs no average at all. Three envelopes, three different definitions of "outside the band".

  1. PRIOR CLOSE TRUE RANGE GAP ATR
    Volatility Interactive lab

    Average True Range

    Inspect true range components, see how gaps affect volatility measurement, calculate Wilder ATR and ATR as a percentage of price, and keep volatility separate from direction.

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  2. CONTRACTION EXPANSION
    Volatility Interactive lab

    Bollinger Bands

    Build a moving-average envelope from standard deviation, inspect band width and %B, identify volatility contraction and expansion, and avoid treating a band touch as a complete signal.

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  3. EMA ± ATR PARALLEL CHANNEL BREAK
    Channels Interactive lab

    Keltner Channels

    Construct an EMA-centered ATR envelope, change the basis and volatility settings, compare Keltner Channels with Bollinger Bands, and define channel-break conditions precisely.

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  4. PRIOR CHANNEL HOLDS UNTIL A NEW EXTREME BREAK
    Channels Interactive lab

    Donchian Channels

    Track rolling highest highs and lowest lows, compare current-bar and prior-channel calculations, detect completed breakout events, and state which bars define the boundary a close is tested against.

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Lesson topics

Synthesis

How indicator formulas support interpretation. Rate of Change and Momentum examines the plainest momentum measure there is. Reading skills include comparing two series for divergence, noticing when four indicators are the same indicator, matching the tool to the regime, and writing conditions precise enough that another person or program reproduces every entry and exit.

  1. PRICE ROC ZERO CROSSINGS SENSITIVITY = LOOKBACK
    Momentum Interactive lab

    Rate of Change and Momentum

    Measure price change over a fixed lookback in percentage and absolute terms, compare zero-line crossings, adjust sensitivity, and distinguish momentum from trend direction and volatility.

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  2. HIGHER HIGH LOWER HIGH CONFIRM ON PRICE DIVERGENCE
    Divergence Interactive lab

    Indicator Divergence

    Compare aligned price swings with RSI or MACD histogram swings, classify regular bullish and bearish divergence, distinguish divergence from disagreement at unrelated bars, and require price confirmation.

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  3. SAME SHAPE TWICE ADDS INFORMATION
    Method Interactive lab

    Combining Indicators Without Redundancy

    Group indicators by function, compare normalized outputs and correlations, build a compact set for a defined purpose, and avoid stacking multiple transformations of the same price behavior as false confirmation.

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  4. TREND RANGE SQUEEZE HIGH VOL SAME THRESHOLD, DIFFERENT MEANING
    Regime Interactive lab

    Indicator Selection by Market Regime

    Classify synthetic market regimes, select indicators suited to the intended decision, receive scored feedback, and justify why the same threshold or crossover is read differently in trends, ranges, contractions, and high volatility.

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  5. TREND FILTER STRENGTH VOLATILITY ENTRY EXIT EXPORTABLE RULE
    Rules Interactive lab

    Indicator-Based Trading Rules

    Convert indicator observations into deterministic conditions, apply trend, strength, and volatility filters, visualize entry and exit events, detect contradictory rules, and export a machine-readable specification.

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Recommended background

Chart reading is assumed; no prior indicator knowledge is needed. Volume-derived tools belong to Volume and Order Flow. Volume and Order Flow covers relative volume, on-balance volume, accumulation/distribution, session and anchored VWAP, volume profile and value area, the tape, footprint and bid-ask delta, cumulative delta and the order book. Technical Indicators deliberately stops short of those volume-derived tools; they belong to Volume and Order Flow.

Interop

Indicator-Based Trading Rules exports a rule set

The specification lesson documents a trading system. It turns what you have learned into explicit conditions, checks them against each other, and then hands the whole rule set back to you as a file, so it can outlive the browser tab it was written in.

Format: technical-indicator-rule-v1

What comes out of it

Indicator-Based Trading Rules takes the direction, the trend, strength and volatility filters, the entry trigger, the exit and the parameters you set, marks the entry and exit events on a synthetic series, and exports the whole specification as a JSON document stamped technical-indicator-rule-v1. The file records the data assumptions it was written against, the rule itself, and diagnostics — the clarity score, whether direction and trend agree, and the events it produced — so a rule you wrote can be read back later and reproduced exactly.

The schema linked beside this is the contract for that shape. It is worth reading if you would rather keep your rules in your own notebook or script: match the shape and the same fields carry over. Note what the export deliberately does NOT contain — any measure of profitability. The diagnostics carry performanceEvaluated: false on purpose, so a rule that is merely well specified is never mistaken for a rule that has been shown to work. Everything runs in your browser — nothing is uploaded, and there is no account anywhere in this course.

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