The formulas have been developed by mathematicians, statisticians and other analyst types. But YOU need to see them as black boxes. Input and output at the click of a button. Most of them are automated, and you insert them over a chart using your trading platform. The best way to learn about them is to play around. They won’t open positions. They’re simply graphical additions to the chart, and there’s literally no way you can cause any damage.  Let take a look at a few.

The simplest and by far the most popular is pivot points. As you can see, we get 5 lines added to the chart to see how far an asset can wander based on how far it diverged in the previous period. The central line is where the period’s price should start. Then above that are 2 resistance lines and 2 support lines. The lines are based on the previous period\s open, close and high prices. And each one of these can be used as a take-profit, stop-loss or opening order level to aim for.

Next is the RSI. This one is called an oscillator because its data isn’t plastered all over the chart but underneath on a scale from 1 to 100. It tells us if an asset is oversold or overbought based on average gains and losses over the previous period. The over-under levels can be set manually, but usually anything below 30 is oversold and anything above 70 – over bought.

A moving average is also very useful. It eliminates fluctuations from a chart and shows us a general trend. Now, the DIFFERENCE between an average and a moving one is that this one moves. If the first point is the average of n points behind it, the next point ALSO goes points back but beginning with the next place up from where we started before. A weighted moving average is the same, but it mathematically increases the weight of the averaged data points the closer they are to the newly calculated average. An exponential moving average is like an exponential one, but we multiply each point by a calculated weighting factor.

Another indicator that’s very popular is Bollinger Bands, which is named after the man who created them – John Bollinger. These actually measure standard deviation of a price from its mean and indicate volatility. What Bollinger does is measure the distance between the price from a 20-day exponential moving average and create a standard deviation from the EMA above and below. What we get are 2 bands with the priceline meandering in between. If it hits one of the borders once, we expect it to be pulled back in. Hit it twice and we can expect a breakout.

There are literally HUNDREDS of these indicators and oscillators and – like I said – you can apply them at the click of a mouse. Then, simply read them and plan your next trade.