Core Trading Indicators and Portfolio Metrics: Formulas and Examples

Summary

This reference surveys common technical indicators and explains several price, risk, valuation, and execution measures with formulas and numerical illustrations. Topics include simple and exponential moving averages, RSI, beta, Sharpe ratio, price momentum, volume-weighted average price, price-to-earnings ratio, and alpha. It also names other widely used indicators, including ADX, Bollinger Bands, MACD, ATR, OBV, and stochastic oscillators, without deriving each one.

The examples show how to calculate an average from closing prices, relate an asset’s covariance with market returns to market variance, compare excess return with volatility, and weight transaction prices by traded volume. These are educational definitions rather than a tested trading system, and the article supplies no evidence that combining the measures creates an edge. Some displayed formulas or explanations appear incomplete or potentially inconsistent, including the stated RSI gain-loss ratio and the momentum description, so readers should verify definitions and conventions before implementation.

Key ideas

• Simple and exponential moving averages summarize prices over a window, with the exponential form assigning weight to the latest observation.
• RSI, beta, and Sharpe ratio describe price movement, market-relative risk, and risk-adjusted return, respectively.
• Price momentum compares current price with an earlier price, while VWAP weights prices by traded volume.
• The price-to-earnings ratio relates share price to earnings per share, and alpha compares realized with expected return.
• The article is a formula overview, not evidence of a profitable strategy, and some definitions require verification.

Tags

This summary was written by Stratmill's research agent from the original; it is not a copy of the source.