Best Customizable Trading Indicators For Traders

Technical analysis is one method traders use to predict the direction of a security.  It is built around the principle that when technical analysts examine previous market patterns of an asset, they can predict future price movements. Technical indicators are one of the tools used by technical analysts. Traders use indicators to understand the supply and demand of assets and other market psychology. They are plotted on the chosen market’s chart and can be customized to fit the trader’s strategy.

Custom Indicators for Crypto Trading

Traders use technical indicators to find highly probable setups and to define the best entry and exit points. Most brokers with proprietary trading platforms offer built-in customizable indicators, allowing traders to build indicators using their preferred parameters. Some of the best indicators you’ll find on a crypto trading platform include:

• The Moving Averages (MA)
• Relative Strength Index (RSI)
• Bollinger Bands
• Fibonacci Retracement
• Moving Average Convergence Divergence (MACD)
• On-Balance Volume (OBV)

These highly precise indicators are for crypto trading and help traders understand the volatile market. The crypto market’s volatile movements offer traders many trading opportunities, which they can find with indicators customized to generate signals when price hits certain levels. In addition to trading flexibility, custom indicators are popular because they allow traders to generate a more nuanced view of the market, hence influencing investors’ sentiments and shaping prices. For example, many traders use technical indicators, such as the Fear and Greed Index, to gauge market sentiments and guide their trading decisions. 

Moving Averages (MA)

The moving average is one of the most popular indicators for its simplicity and effectiveness. The MA uses the average price of a crypto coin, stock, currency, or other instruments over a specific period. In that way, the indicator filters out market noise. It allows traders to concentrate only on average price movements and trends. There are different types of MAs, with simple, exponential, and weighted being the most commonly used. The MA presents as a single line that flows along with the price chart, showing price flow. Traders usually use two or more MAs, such as the 200 MA and 50 EMA.

Relative Strength Index (RSI)

The relative strength index has a lower zero and an upper 100 limit, allowing traders to see where the asset is overbought or oversold. The RSI plots gain against losses, gauging trend strength and momentum. When the RSI is below 30, the asset is oversold and could reverse towards the upside. At the same time, an RSI level above 70 indicates overbought pressure and a potential reversal towards the downside. The RSI is also used to track support and resistance levels since the indicator frequently holds the 30 and 70 levels when the price reaches below or above, respectively.

Bollinger Bands (BB)

Bollinger Bands is another momentum indicator commonly used for trading. BB consists of two indicators: the 20-period simple moving average and a standard deviation band. The moving average indicates the trend, while the standard deviation band indicates volatility. BB is also used as dynamic support and resistance as they move alongside price charts, opening up and closing down to indicate higher and lower volatility. Traders use this indicator because prices typically move within the bands’ upper and lower boundaries. When the bands “squeeze,” it indicates a potential breakout in either direction. BB is also used to determine if an asset is overbought or oversold, measured by price touching or falling outside the lower or upper band.

Fibonacci Retracement (Fib)

The Fib is a retracement tool traders use to identify support and resistance using key Fibonacci levels: 23.6%, 38.2%, 61.8%, and 78.6%. The 50% is also widely used despite not being an official Fibonacci level. The Fib is typically used with trend lines and other indicators to confirm signals. The retracement levels are drawn between two significant points: the lower and upper points. The indicator shows key retracements, allowing traders to place their entry, stop loss, and take profit targets.

Moving Average Convergence Divergence (MACD)

The MACD measures trend momentum and identifies trends and entries/exits. The indicator uses two exponential moving averages (EMAs), ideally used with daily periods. The MACD line shows the result of subtracting the 26-EMA from the 12-EMA. Both lines are shown in different colors and have a positive value when the 12-EMA (red) exceeds the 26-EMA (blue). The value becomes negative when the 12-EMA moves below the 26-EMA. Traders use MACD crossovers, divergences, and rapid rise/falls to enter or exit trades after confirming with other indicators. The signal line (9-EMA) of the MACD line verifies entries.

On-Balance Volume (OBV)

This volume-based indicator tracks inflows into an asset, measuring the buying and selling pressure. The trading volume is an important factor influencing the price of assets, and the rate and volume of buying or selling indicate volatility and trend changes. The OBV indicator is a single line showing bullish or bearish momentum, moving between high and low points. The indicator is a leading indicator, making it essential to predict price trends. Traders watch for a sharp or steady increase/fall in the OBV line to determine trend direction and then use other indicators to confirm their entries/exits.

How To Create and Customize Indicators for Trading

Trading platforms like MetaTrader4/5 and TradingView allow traders to build custom indicators using their native languages. Traders with technical programming knowledge can develop mathematical formulas to measure price and volume data or hire a developer to program them. The indicators are imported as third-party sources and saved on the trading platform. They can modify the parameters as they wish.

For example, TradingView uses Pine Script as its programming language. It allows traders to create custom indicators to backtest and run on their server. TradingView also has a Community Scripts section for accessing other people’s custom indicators. If you’re looking for solid options, begin with Editors’ Picks or Top-rated, highly reviewed, popular scripts. You can look through “Trending” to see new user-created indicators. If you have a trading style with certain indicators, save them as a template. This allows you to load your current setup as you please without reconfiguring it each time you examine a new instrument or period.

Customizing indicators for trading depends on the trading platform. For proprietary trading software, brokers offer simple indicators that allow traders to modify parameters like the moving average period, the upper and lower limits of the RSI, and the Fibonacci retracement levels. Traders can also modify the indicator colors and line thickness and combine two or more indicators to measure similar features. Here’s a typical process to customize indicators:

1. Locate the indicator on the trading platform.
2. Locate the ‘Settings’ or ‘Properties’ button and enter ‘Modify’ or ‘Edit.’
3. Change the parameters as you wish.
4. Click ‘Save’ or ‘Done’ to exit.
5. Load and use the indicator.

Maximizing Trading Success With Custom Indicators

Trading with indicators benefits new traders looking for several confirmations before buying or selling an asset. Platforms like TradingView and MetaTrader empower users to create, customize, and optimize indicators to suit their unique trading styles. With the right combination of custom indicators, traders can gain a competitive edge and improve their chances of achieving consistent profitability in an ever-evolving market.