Skip to main content

Twelve Data Technical Indicators - Advanced Trading Signals

Technical indicators are mathematical calculations based on price and volume data that help traders identify trends, momentum, volatility, and potential reversal points. The Twelve Data Market Data Connector's indicator operation provides access to over 20 popular technical indicators, from simple moving averages to complex oscillators like MACD and Bollinger Bands.

This comprehensive guide shows you how to configure and use technical indicators through the interface, with practical examples for different trading strategies.

Supported Technical Indicators​

Trend Indicators​

  • SMA (Simple Moving Average): Basic trend following indicator
  • EMA (Exponential Moving Average): Weighted average giving more importance to recent prices
  • WMA (Weighted Moving Average): Weighted average with linear decay
  • DEMA (Double Exponential Moving Average): Smoothed EMA for reduced lag
  • TEMA (Triple Exponential Moving Average): Further smoothing for trend identification

Momentum Indicators​

  • RSI (Relative Strength Index): Measures price momentum on a 0-100 scale
  • Stochastic Oscillator: Compares closing price to price range over time
  • Williams %R: Momentum indicator similar to Stochastic but inverted
  • MFI (Money Flow Index): Volume-weighted RSI
  • CCI (Commodity Channel Index): Identifies cyclical trends

Volatility Indicators​

  • BBANDS (Bollinger Bands): Price channels based on standard deviation
  • ATR (Average True Range): Measures volatility
  • NATR (Normalized Average True Range): Normalized ATR

Volume Indicators​

  • AD (Accumulation/Distribution): Volume-based momentum indicator
  • ADOSC (Chaikin A/D Oscillator): Oscillator version of A/D line
  • OBV (On-Balance Volume): Cumulative volume-based indicator

Price Transform Indicators​

  • AVGPRICE (Average Price): Average of OHLC prices
  • MEDPRICE (Median Price): Median of high and low prices
  • TYPPRICE (Typical Price): Average of high, low, and close
  • WCLPRICE (Weighted Close Price): Weighted average favoring close

MACD and Signal Indicators​

  • MACD (Moving Average Convergence Divergence): Trend-following momentum indicator
  • MACDEXT (MACD with controllable MA type): Extended MACD with customizable moving averages
  • MACDFIX (MACD Fixed): MACD with fixed 12/26/9 parameters
  • STOCHRSI (Stochastic RSI): Stochastic oscillator applied to RSI

Step-by-Step Usage Guide​

Basic Indicator Configuration​

Step 1: Select the Worker

  • Add a new worker to your workflow
  • Choose worker type: twelve_data
  • Select operation: indicator

Step 2: Choose Your Indicator

  • indicator: Select from the dropdown list (sma, ema, rsi, macd, bbands, etc.)
  • symbol: The asset symbol (e.g., AAPL, EUR/USD)
  • interval: Time interval for calculation (1min, 5min, 1day, etc.)

Step 3: Configure Indicator Parameters

  • time_period: Lookback period (typically 14, 20, 50, 200)
  • series_type: Price series to use (close, open, high, low)

Step 4: Advanced Parameters (Indicator-Specific)

  • For MACD: fastperiod, slowperiod, signalperiod
  • For Bollinger Bands: Additional parameters may be available
  • For Stochastic: Additional oscillator parameters

Example: Simple Moving Average (SMA)​

Configuration:

{
  "operation": "indicator",
  "indicator": "sma",
  "symbol": "MSFT",
  "interval": "1day",
  "time_period": 20,
  "series_type": "close"
}

Output Structure:

{
  "operation": "indicator",
  "indicator": "sma",
  "result": {
    "meta": {
      "symbol": "MSFT",
      "indicator": "sma",
      "interval": "1day",
      "time_period": 20,
      "series_type": "close"
    },
    "values": [
      {
        "datetime": "2024-10-31",
        "sma": 415.67
      }
    ]
  }
}

Example: Relative Strength Index (RSI)​

Configuration:

{
  "operation": "indicator",
  "indicator": "rsi",
  "symbol": "BTC/USD",
  "interval": "1h",
  "time_period": 14,
  "series_type": "close"
}

Output Structure:

{
  "operation": "indicator",
  "indicator": "rsi",
  "result": {
    "values": [
      {
        "datetime": "2024-10-31 14:00:00",
        "rsi": 67.45
      }
    ]
  }
}

Example: MACD (Moving Average Convergence Divergence)​

Configuration:

{
  "operation": "indicator",
  "indicator": "macd",
  "symbol": "SPY",
  "interval": "1day",
  "fastperiod": 12,
  "slowperiod": 26,
  "signalperiod": 9,
  "series_type": "close"
}

Output Structure:

{
  "operation": "indicator",
  "indicator": "macd",
  "result": {
    "values": [
      {
        "datetime": "2024-10-31",
        "macd": 5.23,
        "macd_signal": 4.89,
        "macd_hist": 0.34
      }
    ]
  }
}

Example: Bollinger Bands​

Configuration:

{
  "operation": "indicator",
  "indicator": "bbands",
  "symbol": "AAPL",
  "interval": "1day",
  "time_period": 20,
  "series_type": "close"
}

Output Structure:

{
  "operation": "indicator",
  "indicator": "bbands",
  "result": {
    "values": [
      {
        "datetime": "2024-10-31",
        "bbands_upperband": 235.67,
        "bbands_middleband": 225.45,
        "bbands_lowerband": 215.23
      }
    ]
  }
}

Practical Trading Applications​

Trend Following Strategy with Moving Averages​

Workflow Setup:

  1. Worker 1: Fast EMA (12-period)
    • indicator: ema
    • time_period: 12
  2. Worker 2: Slow EMA (26-period)
    • indicator: ema
    • time_period: 26
  3. Worker 3: Signal Generator
    • Compare fast vs slow EMA for crossover signals

Trading Rules:

  • Buy when fast EMA crosses above slow EMA
  • Sell when fast EMA crosses below slow EMA
  • Use for trending markets

Momentum Trading with RSI​

Configuration for RSI Strategy:

{
  "indicator": "rsi",
  "time_period": 14,
  "series_type": "close",
  "interval": "1h"
}

Trading Signals:

  • Overbought (>70): Potential sell signal
  • Oversold (<30): Potential buy signal
  • Divergence: RSI vs price divergence indicates reversals

Volatility Trading with Bollinger Bands​

Configuration:

{
  "indicator": "bbands",
  "time_period": 20,
  "series_type": "close",
  "interval": "4h"
}

Trading Signals:

  • Price touches upper band: Potential resistance/short signal
  • Price touches lower band: Potential support/long signal
  • Band squeeze: Anticipate breakout moves
  • Band expansion: High volatility periods

MACD Divergence Strategy​

Configuration:

{
  "indicator": "macd",
  "fastperiod": 12,
  "slowperiod": 26,
  "signalperiod": 9
}

Signal Interpretation:

  • MACD > Signal: Bullish momentum
  • MACD < Signal: Bearish momentum
  • Histogram changes: Acceleration/deceleration
  • Zero line crosses: Major trend changes

Advanced Configuration Techniques​

Multi-Timeframe Analysis​

Short-term Momentum:

{
  "interval": "15min",
  "indicator": "rsi",
  "time_period": 14
}

Medium-term Trend:

{
  "interval": "1h",
  "indicator": "macd",
  "fastperiod": 12,
  "slowperiod": 26
}

Long-term Context:

{
  "interval": "1day",
  "indicator": "sma",
  "time_period": 200
}

Custom Indicator Combinations​

Trend + Momentum Setup:

  1. SMA 50/200: Long-term trend filter
  2. RSI 14: Short-term momentum
  3. MACD: Trend confirmation

Volatility + Momentum:

  1. Bollinger Bands: Volatility levels
  2. Stochastic: Momentum confirmation
  3. ATR: Volatility measurement

Parameter Optimization​

Conservative Settings:

  • RSI: period 21 (smoother signals)
  • MACD: 12/26/9 (standard parameters)
  • BBands: period 20, 2 SD (traditional settings)

Aggressive Settings:

  • RSI: period 9 (faster signals)
  • MACD: 8/21/8 (more responsive)
  • BBands: period 10, 1.5 SD (tighter bands)

Integration with Other Operations​

Combining with Price Data​

Sequential Analysis:

  1. Fetch Price Data: Use time_series for OHLCV
  2. Calculate Indicators: Apply to the price data
  3. Generate Signals: Based on indicator relationships

Example Workflow:

  • Worker 1: time_series (AAPL, 1day, 100 points)
  • Worker 2: indicator (rsi, time_period: 14)
  • Worker 3: Signal logic based on RSI levels

Multi-Asset Indicator Scanning​

Batch Processing:

{
  "symbol": "AAPL,MSFT,GOOGL,AMZN",
  "indicator": "rsi",
  "time_period": 14
}

Use Cases:

  • Find oversold assets across portfolio
  • Identify strong momentum stocks
  • Scan for breakout candidates

Best Practices and Tips​

Indicator Selection Guidelines​

  • Trending Markets: Use trend-following indicators (SMA, EMA, MACD)
  • Ranging Markets: Use oscillators (RSI, Stochastic, CCI)
  • Volatile Markets: Use volatility indicators (Bollinger Bands, ATR)
  • Volume Confirmation: Combine with volume indicators (OBV, MFI)

Parameter Optimization​

  • Time Period: Match your trading timeframe
    • Scalping: 5-15 period
    • Day trading: 14-21 period
    • Swing trading: 21-50 period
  • Series Type: Usually 'close' for most indicators
  • Interval: Should match your chart timeframe

Signal Filtering​

  • Multiple Confirmations: Use 2-3 indicators for stronger signals
  • Trend Filters: Don't trade against major trends
  • Volume Filters: Confirm signals with volume analysis
  • Time Filters: Avoid trading during low liquidity periods

Risk Management​

  • Stop Losses: Place below recent swing lows for longs
  • Position Sizing: Reduce size in high volatility
  • Take Profits: Use trailing stops or target levels
  • Maximum Drawdown: Monitor portfolio risk levels

Common Trading Strategies​

Moving Average Crossover System​

Setup:

  • Fast EMA (9) and Slow EMA (21)
  • Buy on fast crossing above slow
  • Sell on fast crossing below slow

Enhancements:

  • Add RSI filter (>50 for buys, <50 for sells)
  • Use ATR for position sizing
  • Implement trailing stops

RSI Divergence Strategy​

Setup:

  • RSI 14 on 4h chart
  • Look for divergence between price and RSI
  • Enter on divergence confirmation

Entry Rules:

  • Bullish divergence: RSI makes higher low, price makes lower low
  • Bearish divergence: RSI makes lower high, price makes higher high

Bollinger Band Squeeze Strategy​

Setup:

  • Bollinger Bands 20, 2 SD
  • Wait for bands to squeeze (low volatility)
  • Enter on breakout from squeeze

Risk Management:

  • Stop loss at middle band
  • Target at opposite band
  • Exit if false breakout

Performance Optimization​

API Efficiency​

  • Batch Requests: Calculate indicators for multiple symbols
  • Minimal Data: Request only needed time periods
  • Caching: Store indicator values for repeated use

Workflow Design​

  • Parallel Processing: Calculate multiple indicators simultaneously
  • Conditional Logic: Only calculate complex indicators when needed
  • Error Handling: Implement fallbacks for API issues

Troubleshooting​

No Indicator Values​

  • Check Symbol: Verify symbol is valid and traded
  • Validate Parameters: Ensure time_period is reasonable
  • Confirm Interval: Make sure interval has sufficient data

Unexpected Results​

  • Data Quality: Check for gaps in price data
  • Parameter Ranges: Verify parameters are within valid ranges
  • Series Type: Ensure correct price series is selected

Performance Issues​

  • Reduce Period: Use shorter time periods for faster calculations
  • Limit Data: Request smaller datasets
  • Optimize Intervals: Use appropriate time intervals

Conclusion​

Technical indicators are powerful tools for identifying trading opportunities and managing risk. The Twelve Data indicator operation provides access to industry-standard calculations that can be easily configured through the interface.

By understanding how to select appropriate indicators, optimize parameters, and combine multiple signals, you can build robust trading strategies. Remember that no indicator is infallible - always use them as part of a comprehensive trading plan that includes risk management and market analysis.

For more advanced analysis, consider combining indicators with fundamental data and market sentiment analysis. The key to successful indicator trading lies in consistent application, thorough testing, and disciplined execution.