The moment you look at live charts, you can get dizzy with signals. Therefore, traders now excessively rely on technical indicators that offer them a secure understanding of market psychology.

Mixing the top trading indicators into your algo trading software makes sense. You can use RSI volatility bands, MACD, and HMA together to create a smart, automated trading strategy.

Choosing the appropriate indicator means you can achieve discipline in your trading execution. This blog will teach you why technical indicators are important, how to blend indicators together, and the top trading indicators to watch in 2025.

Technical indicators help traders sense the movement of the market with ease and trade with confidence. These pattern-based signals offer accurate information on the price and volume of trades with added security.

Tech indicators clarify the noise from price data, allowing you to derive meaningful insights. While price charts offer a narrative of price action, indicator data quantitatively translates that narrative into explicit, actionable signals.

Use of multiple technical indicators isn’t just smart trading; it is a necessity with modern trading. Here is why:

• They specify objective entry and exit points in the market by providing an objective signal to base decisions. Thereby, they help in minimising emotional decision-making and ensuring that you remain consistent with your trading plan.

• They quantify momentum, trends, and volatility, helping you not only evaluate price direction, but also price strength.

• They work in an additive sense, together with each indicator's signals complementing each other. For example, RSI might be signalling that market conditions might be overbought, but the MACD might confirm whether the market's prior trend is strong enough to follow that trade or to fade it.

• They smoothly integrate into algo trading software, allowing automated decisions to be applied to multiple platforms via options strategy builders and additional tools.

• They can increase strategy performance by providing a more disciplined approach to your trade decisions. In fact, the back testing technology using 2-3 indicators together can generate a return of around 18% each year.

A recent research study of 2025 comparing the accuracy levels of these technical indicators in Indonesia’s LQ45 index will tell you why combining the indicators is important. The index showed that the accuracy of RSI is 97% whereas MACD’s signal accuracy is around 52%. Therefore, combining the results of these indicators will eventually help you minimize signal failures. 

Let’s now discuss in detail these top trading indicators to watch by breaking them down according to their core functionalities. Knowing the function of the indicators allows you to create an effective trading strategy. All of these technical indicators can be broken down into three general categories:

• Momentum Oscillator Indicators

These indicators measure the level of speed and strength of price movement. But they also tell you the market's overbought or oversold levels, which normally lead to price reversal.

Example: RSI (Relative Strength Index) often shows overbought conditions above 70 and oversold conditions below 30.

Use: Obviously, it's a good way to identify divergences, momentum shifts, and price exhaustion.

• Trend Following Indicators

These indicators are designed to show you the direction of a longer-term market trend. Its strength is that it filters out the short-term noise, making you look at the bigger picture.

Example: MACD (Moving Average Convergence Divergence) is based on the difference between 12- and 26-period EMAs and a signal line.

Example: HMA (Hull Moving Average) will provide a smoother, faster trend indication compared to the traditional moving average techniques.

Use: Good for confirming bullish or bearish momentum and direction for trade.

• Volatility & Confluence Indicators

These indicators are typically used to confirm if the market is trending, ranging, or shifting. Moreover, they help traders to take note of the possible impact of a price fluctuation, considering its historical volatility and implied volatility.

Example: HMA again often appears in this category because of its adaptive responsiveness.

Use: Helps to identify trend changes and price action by providing the meaning behind market movements.

When you combine momentum, trend, and volatility-based trade signals together, your algo trading software strategy becomes stronger. Together, they will help you align your trading direction, timing, and context. 

Each indicator has a specific job to do, helping you build a smart trading algorithm. When combined the correct way, using RSI, MACD, and the HMA gets your strategy a nice framework with consistency, precision, and automation through tools like Options Strategy Builder.

• Use HMA for Trend Direction

HMA provides very fast and smooth trend direction with the least lag as compared to other indicators. You can look forward to going long when the price is above the HMA. Conversely, go short when the price is below the HMA. Using this trend filter keeps you in alignment with the momentum of the market and helps you save from entering into weak or fading trends.

• Use MACD for Momentum Confirmation

MACD confirms that the trend has enough strength. Therefore, you can wait for the MACD line to cross above the signal line with histogram bars expanding to confirm momentum. This will lower your chances of getting in on weak or fading trends.

• Use RSI for Entry and Exit Timing

RSI will help you define your entry and exit zones in the confirmed trend. You can enter trades when the RSI rises out of oversold and exit near overbought. This simple strategy will help you avoid emotional trades, premature exits, and allow you to be more scientific with your trade exit, which could have high probability signals for you.

• Confirm with Multi-timeframe Alignment

You should first confirm on a higher time frame (for example, the daily) and time your entry on a lower time frame (for example, the hourly time). Using multiple time frames will reduce risky adventures and strengthen your trading decisions with accuracy and consistency. 

• Add Volume or Additional Filters

Trade volume spikes, in addition to indicator signals, increase the quality of trades you make. You can assure that the trade is going to be profitable if the volume is above the average, along with other signals, for instance, RSI > 50, and a MACD crossover. Multi-filter combinations will usually provide you with greater confirmation and conviction for moves, and help to lower potential losses.

• Use Smart Risk Management

Use ATR to determine your adjustable stop-loss levels based on market movement. Try to keep the risk per trade within the range of 1-2% of your capital. You can use a trailing stop or fixed targets to protect your profits. Whatever you choose, always keep proper position sizing and risk assessment within each trade.

• Automate Your Logic for Consistency

Move all of your indicator conditionals into code as you plan to execute your strategy using algo trading software. Remember to define everything in terms of each rule: HMA = trend, MACD = momentum, and RSI = timing, and spend time back-testing your strategy before going live.

Once you accept combining RSI, MACD, and HMA, you transition from guessing to executing. This multi-dimensional framework gives you clarity, consistency, and durability. Once you put these indicators in an algo trading software, you can automatically make smart and strategic trades. With systematic movement and back testing, you will make continuous successful trading in 2025.