Skip to main content

Technical Indicators

⚠️ IMPORTANT DISCLAIMER​

NOT FINANCIAL ADVICE: This documentation is for educational purposes only. Technical indicators are tools for analysis and do not guarantee trading success or predict future market movements.

RISK WARNING:

  • All trading involves substantial risk of loss
  • Past performance does not indicate future results
  • Technical indicators can produce false signals
  • No indicator works in all market conditions
  • Always use proper risk management
  • Consult qualified financial advisors before trading

NO WARRANTIES: Vaanam provides these indicators "as-is" without any guarantees of accuracy, completeness, or fitness for any particular purpose.

Overview​

This document provides detailed information about all technical indicators supported in Vaanam DSL. Each indicator includes its purpose, calculation method, typical usage, and parameter guidelines.

Remember: These are analytical tools, not trading recommendations.

Moving Averages​

Simple Moving Average (SMA)

Purpose: Smooths price data to identify trend direction
Format: ASSET_STOCK_TECH_SMA_[PRICE_TYPE]_[PERIOD]
Example: ASSET_STOCK_TECH_SMA_C_20

Parameters:

  • Price Type: O (Open), H (High), L (Low), C (Close), V (Volume)
  • Period: Number of periods to average (typically 10, 20, 50, 100, 200)

Usage:

  • Trend analysis (not prediction)
  • Potential support/resistance reference
  • Crossover pattern identification

Limitations: SMAs lag price action and can give false signals in choppy markets

Common Periods:

  • Short-term: 10, 20 days
  • Medium-term: 50 days
  • Long-term: 100, 200 days
Exponential Moving Average (EMA)

Purpose: More responsive moving average that gives greater weight to recent prices
Format: ASSET_STOCK_TECH_EMA_[PRICE_TYPE]_[PERIOD]
Example: ASSET_STOCK_TECH_EMA_C_12

Parameters:

  • Price Type: O, H, L, C, V
  • Period: Number of periods (typically 12, 26, 50)

Usage:

  • Trend analysis with less lag than SMA
  • MACD calculation component
  • Dynamic support/resistance reference

Limitations: More sensitive to price noise; can generate more false signals

Advantages: Reacts quicker to price changes than SMA

Weighted Moving Average (WMA)

Purpose: Moving average where recent prices have higher weights
Format: ASSET_STOCK_TECH_WMA_[PRICE_TYPE]_[PERIOD]
Example: ASSET_STOCK_TECH_WMA_C_10

Parameters:

  • Price Type: O, H, L, C, V
  • Period: Number of periods

Usage: Similar to EMA but with linear weight distribution

Oscillators​

Relative Strength Index (RSI)

Purpose: Momentum oscillator measuring speed and change of price movements
Format: ASSET_STOCK_TECH_RSI_[PRICE_TYPE]_[PERIOD]
Example: ASSET_STOCK_TECH_RSI_C_14

Parameters:

  • Price Type: Usually C (Close)
  • Period: Typically 14 days

Range: 0 to 100 Interpretation:

  • Above 70: May indicate overbought conditions
  • Below 30: May indicate oversold conditions
  • 50: Neutral momentum

Warning: Overbought/oversold conditions can persist longer than expected. Markets can remain "overbought" during strong uptrends.

Usage:

  • Identify overbought/oversold conditions
  • Divergence analysis
  • Trend strength measurement
Stochastic Oscillator (STOCH)

Purpose: Compares closing price to price range over specific period
Format: ASSET_STOCK_TECH_STOCH_[FASTK]_[SLOWK]_[SLOWD]_[LINE] Example: ASSET_STOCK_TECH_STOCH_14_3_3_K (%K line with FastK=14, SlowK=3, SlowD=3)

Parameters:

  • FastK: Lookback period (typically 14)
  • SlowK: Smoothing period for %K (typically 3)
  • SlowD: Smoothing period for %D (typically 3)
  • Line: K or D

Range: 0 to 100 Interpretation:

  • Above 80: May indicate overbought conditions
  • Below 20: May indicate oversold conditions
  • %K crossing above %D: Potential bullish pattern

Warning: Stochastic can remain at extreme levels during strong trends

Commodity Channel Index (CCI)

Purpose: Identifies cyclical trends and overbought/oversold conditions
Format: ASSET_STOCK_TECH_CCI_[PERIOD]
Example: ASSET_STOCK_TECH_CCI_20

Parameters:

  • Period: Typically 20

Range: Unbounded (typically -100 to +100) Interpretation:

  • Above +100: Overbought
  • Below -100: Oversold
Money Flow Index (MFI)

Purpose: Volume-weighted RSI that incorporates both price and volume
Format: ASSET_STOCK_TECH_MFI_[PERIOD]
Example: ASSET_STOCK_TECH_MFI_14

Parameters:

  • Period: Typically 14

Range: 0 to 100 Interpretation: Similar to RSI but considers volume

Volatility Indicators​

Average True Range (ATR)

Purpose: Measures market volatility
Format: ASSET_STOCK_TECH_ATR_[PERIOD]
Example: ASSET_STOCK_TECH_ATR_14

Parameters:

  • Period: Typically 14

Usage:

  • Position sizing
  • Stop-loss placement
  • Volatility filtering
Bollinger Bands (BBANDS)

Purpose: Volatility bands around moving average
Format: ASSET_STOCK_TECH_BBANDS_[PERIOD]_[DEVIATION]_[BAND] Example: ASSET_STOCK_TECH_BBANDS_20_2_UPPER (20-period, 2 std dev, upper band)

Parameters:

  • Period: Typically 20
  • Deviation: Standard deviations (typically 2.0)
  • Band: UPPER, MIDDLE, LOWER

Usage:

  • Overbought/oversold identification
  • Volatility measurement
  • Mean reversion strategies

Interpretation:

  • Price touching upper band: May indicate overbought conditions
  • Price touching lower band: May indicate oversold conditions
  • Band width indicates volatility levels

Warning: Prices can "walk the bands" during strong trends, making traditional interpretations unreliable

Standard Deviation (STDEV)

Purpose: Measures price volatility
Format: ASSET_STOCK_TECH_STDEV_[PRICE_TYPE]_[PERIOD]
Example: ASSET_STOCK_TECH_STDEV_C_20

Parameters:

  • Price Type: Usually C
  • Period: Lookback period

Trend Indicators​

Average Directional Index (ADX)

Purpose: Measures trend strength regardless of direction
Format: ASSET_STOCK_TECH_ADX_[PERIOD]
Example: ASSET_STOCK_TECH_ADX_14

Parameters:

  • Period: Typically 14

Range: 0 to 100 Interpretation:

  • Above 25: May indicate stronger trend
  • Below 20: May indicate weaker trend
  • Above 50: May indicate very strong trend

Note: ADX measures trend strength, not direction

ADX Rating (ADXR)

Purpose: Smoothed version of ADX
Format: ASSET_STOCK_TECH_ADXR_[PERIOD]
Example: ASSET_STOCK_TECH_ADXR_14

Aroon Indicator (AROON)

Purpose: Identifies trend changes and strength
Format: ASSET_STOCK_TECH_AROON_[PERIOD]_[LINE]
Example: ASSET_STOCK_TECH_AROON_14_UP

Parameters:

  • Period: Typically 14
  • Line: UP or DOWN

Range: 0 to 100 Interpretation:

  • Aroon Up above 70: Strong uptrend
  • Aroon Down above 70: Strong downtrend
Parabolic SAR (SAR)

Purpose: Trend-following indicator providing entry/exit points
Format: ASSET_STOCK_TECH_SAR_[ACCELERATION]_[MAXIMUM]
Example: ASSET_STOCK_TECH_SAR_0.02_0.2

Parameters:

  • Acceleration: Acceleration factor (typically 0.02)
  • Maximum: Maximum acceleration (typically 0.2)

Usage:

  • Trailing stop-loss
  • Trend reversal signals

MACD (Moving Average Convergence Divergence)​

MACD

Purpose: Shows relationship between two moving averages
Format: ASSET_STOCK_TECH_MACD_[FAST]_[SLOW]_[SIGNAL]_[LINE]
Example: ASSET_STOCK_TECH_MACD_12_26_9_MACD

Parameters:

  • Fast: Fast EMA period (typically 12)
  • Slow: Slow EMA period (typically 26)
  • Signal: Signal line EMA period (typically 9)
  • Line: MACD, SIGNAL, or HIST

Components:

  • MACD Line: Fast EMA - Slow EMA
  • Signal Line: EMA of MACD line
  • Histogram: MACD - Signal line

Usage:

  • MACD crossing above signal: Potential bullish pattern
  • MACD crossing below signal: Potential bearish pattern
  • Histogram shows momentum changes

Warning: MACD crossovers can produce many false signals in sideways markets

Volume Indicators​

On-Balance Volume (OBV)

Purpose: Uses volume flow to predict price changes
Format: ASSET_STOCK_TECH_OBV_[PERIOD]
Example: ASSET_STOCK_TECH_OBV_10

Usage:

  • Confirm price trends
  • Identify divergences
Chaikin A/D Oscillator (ADOSC)

Purpose: Combines price and volume to show accumulation/distribution
Format: ASSET_STOCK_TECH_ADOSC_[FAST]_[SLOW]
Example: ASSET_STOCK_TECH_ADOSC_3_10

Parameters:

  • Fast: Fast period (typically 3)
  • Slow: Slow period (typically 10)

Other Indicators​

Rate of Change (ROC)

Purpose: Measures percentage change in price over specified period
Format: ASSET_STOCK_TECH_ROC_[PRICE_TYPE]_[PERIOD]
Example: ASSET_STOCK_TECH_ROC_C_10

Parameters:

  • Price Type: Usually C
  • Period: Lookback period

Usage: Momentum measurement

Balance of Power (BOP)

Purpose: Measures buying vs selling pressure
Format: ASSET_STOCK_TECH_BOP_[PERIOD]
Example: ASSET_STOCK_TECH_BOP_14

Range: -1 to +1 Interpretation:

  • Positive values: Buying pressure
  • Negative values: Selling pressure
Donchian Channels (DONCHIAN)

Purpose: Trend-following indicator using highest high and lowest low
Format: ASSET_STOCK_TECH_DONCHIAN_[PERIOD]_[BAND]
Example: ASSET_STOCK_TECH_DONCHIAN_20_UPPER

Parameters:

  • Period: Lookback period (typically 20)
  • Band: UPPER, MIDDLE, LOWER

Components:

  • Upper: Highest high over period
  • Lower: Lowest low over period
  • Middle: Average of upper and lower
Ceiling Function (VCEIL)

Purpose: Mathematical ceiling function applied to price data
Format: ASSET_STOCK_TECH_VCEIL_[PERIOD]
Example: ASSET_STOCK_TECH_VCEIL_14

Parameters:

  • Period: Lookback period

Usage: Rounds price values up to nearest integer Note: Specialized mathematical function with limited trading applications

⚠️ CRITICAL WARNINGS​

Indicator Limitations​

  1. False Signals: All indicators can and will produce false signals
  2. Lagging Nature: Most indicators are based on past data and lag current price action
  3. Market Conditions: Indicators perform differently in trending vs. sideways markets
  4. Whipsaws: Indicators can change signals rapidly in volatile conditions
  5. Optimization Trap: Parameters that worked historically may not work in the future

Risk Management Essentials​

  • Never risk more than you can afford to lose
  • Use stop-losses and position sizing
  • Diversify across multiple strategies and timeframes
  • Test thoroughly before live trading
  • Understand that losses are part of trading

Vaanam and its indicators are analytical tools only. Users are solely responsible for their trading decisions and any resulting profits or losses.

Parameter Guidelines​

Common Period Settings​

  • Short-term: 5-14 periods
  • Medium-term: 20-50 periods
  • Long-term: 100-200 periods

Timeframe Considerations​

  • Intraday: Use shorter periods (5-20)
  • Daily: Standard periods (14, 20, 50)
  • Weekly/Monthly: Longer periods (50-200)

Optimization Tips​

  1. Avoid over-optimization: Don't curve-fit parameters to historical data
  2. Market adaptation: Different markets may require different parameters
  3. Volatility adjustment: High volatility markets may need longer periods
  4. Backtesting: Always test parameter combinations across different market conditions

Combining Indicators​

Confirmation Strategies​

  • Use multiple indicators from different categories
  • Trend + Momentum + Volume for comprehensive analysis
  • Example: SMA (trend) + RSI (momentum) + OBV (volume)

Avoiding Redundancy​

  • Don't use multiple indicators that measure the same thing
  • Example: Avoid using RSI and Stochastic together (both momentum oscillators)

Signal Filtering​

  • Use trend indicators to filter oscillator signals
  • Example: Only take RSI oversold signals when price is above long-term SMA

© 2026 Vaanam, Inc. All rights reserved.