Day Trading Technical Indicators 2

Question 1

VWAP stands for Volume Weighted Average Price. In day trading, it is most commonly used as:

Accepted Answer

An intraday benchmark for institutional order flow and trade quality

Answer

VWAP is an intraday indicator used by institutions as a benchmark; price above VWAP is considered bullish and below is bearish.

Question 2

The Stochastic Oscillator compares a security's closing price to its price range over a given period. A reading above 80 generally indicates:

Accepted Answer

The asset is in overbought territory

Answer

A Stochastic reading above 80 signals overbought conditions, suggesting the price may be due for a pullback.

Question 3

What is the primary difference between a Simple Moving Average (SMA) and an Exponential Moving Average (EMA)?

Accepted Answer

EMA gives more weight to recent prices, making it more responsive to new data

Answer

The EMA applies a multiplier that gives more weight to recent prices, causing it to react faster to price changes than the SMA.

Question 4

In technical analysis, what does 'Average True Range' (ATR) measure?

Accepted Answer

Market volatility by calculating average price range including gaps

Answer

ATR measures market volatility by averaging the true range (including overnight gaps) over a specified number of periods.

Question 5

A day trader uses the 9 EMA and 20 EMA. A bullish signal is triggered when:

Accepted Answer

The 9 EMA crosses above the 20 EMA

Answer

The shorter 9 EMA crossing above the longer 20 EMA signals that short-term momentum has turned bullish.

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