7 Best Indicators and Tools in 2023 for Day Trading S&P 500
Over the past year of trading $SPY, one critical thing I’ve learned is just how important it is to utilize the best indicator and tools from day one.
When you employ the right tools for trading $SPY, it can literally save you hours of time that’d be otherwise spent on much more manual work.
First up, we’re exploring the most useful indicators that can be found in the Chart tools on the market today, so that you can take a more effective approach to trading the S&P 500 in the first place.
1. EMA13
One of my favorite indicators for $SPY is the Exponential Moving Average (EMA). The reason this one is very useful to me, is because it follows the price action of a stock very closely. Reducing the lag between the stock and the indicator.
I typically like to set the configuration value to 13, and follow this in the 10 minute timeframe when I’m scalping or day trading $SPY.
In the image above, you can see, most of the time, when the price action is below the line, the trend is very bearish. When the price action goes above the EMA13 line, it can typically be a sign of bullishness.
2. VWAP
Another great indicator is the Volume-Weighted Average Price (VWAP). VWAP is a great day trade indicator.
If you look at the image below, you can see the VWAP indicator (blue line).
Typically, when the price action of a stock goes above the line, it can show a sign of bullishness. The same goes for a bearish run–if the price action goes below the VWAP line, it can show a sign of weakness.
In the image above, I like to use the combination of the EMA13 and VWAP crossover. It can be a fairly strong combination because of how accurate it can be.
For any other public stocks, I like to use the EMA9 & VWAP crossover technique. If you’d like to read more about that trading strategy, give this article a read: “What is VWAP and how to use it in stock trading“.
3. Time&Sales
The Time&Sales is another top intraday trader tool. The Time&Sales shows real-time transactions happening in chronological order.
It can illustrate to the trader if a stock is being bought or sold aggressively based on the frequency and volume of the transactions.
4. Order Book Level 2
The Order Book is another great widget that can be combined with the Time&Sales widget. It allows you to see the size of the order blocks being put for a buy or a sell.
Once you see a block order coming closer, you can observe the Times&Sales to see how it behaves or the price action of a stock.
5. Timeframe Continuity
As a stock/option trader, following the trend is always the goal. Fighting against the trend can lead to some nasty losses.
The next tool I like use is on TradingView platform, and it’s called TC True Strength Indicator. This a custom indicator created by SeaSide420.
This indicator adds arrows on the right side of the chart. The arrows represent the trend of the stock in different timeframes–from the hour to the year.
When all the arrows point in the same direction, it indicates that buyers or sellers have full control of the stock, and lets you know if you should be bullish or bearish about a stock.
If you’re interested in learning more about why TradingView is my #1 tool of choice, give this article a read: “6 Best Stock Trading Tools in 2022 for Better Charting, Research and Trade Executions“.
6. MACD
The Moving Average Convergence/Divergence (MACD) indicator is simple indicator that measures the momentum of a stock. This indicator just lets me know when the trend of a stock is going to be bearish (red) or bullish (green).
7. RSI
To put it simply, the Relative Strength Index (RSI) is an indicator that lets the trader/investor if a stock if overbought or oversold.
Traditionally, a stock is overbought when the RSI value is above 70 and it’s oversold when it’s below 30.
I like to use this indicator if I’m starting a swing trade. If you’d like to read more about how RSI react when they’re under 30, take a look at this article: “A beginners guide to swing trading in the stock market“.
I like to tweet about stocks and post helpful swing trades. Follow me there if you would like some too!
