# Indicators & signals

> The building blocks: trend, momentum, and bands.

Source: https://www.texttoquant.com/academy/indicators-and-signals
Level: Beginner · 5 min · lesson 3 of 12

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Almost every strategy is built from a small vocabulary of indicators. Learn what each family measures and you can describe most ideas without ever looking up a formula.

## Trend vs momentum

Trend indicators (moving averages) tell you which way price has been leaning. Momentum oscillators (RSI, MACD) tell you how fast it's moving and whether that speed is fading. Trend answers 'which direction?', momentum answers 'is the move still strong?'.

## Signals are events, not states

A good entry is an event: a cross, a breakout, a threshold being crossed. It is not a condition that's simply true for weeks. 'MACD crosses above its signal line' fires once; 'MACD is positive' can be true for a month. Events keep you from re entering the same trade every bar.

## Combine to be selective

One indicator is a blunt instrument. This example only buys when momentum turns up (a MACD cross) and price already has strength (RSI above 50). Together those two conditions trade far less often, but on cleaner setups.

## Try it

```
Buy BTC when MACD crosses above its signal line and RSI is above 50; exit when MACD crosses back below its signal line, on 1D, last 3 years.
```

Run it: https://www.texttoquant.com/terminal?q=Buy%20BTC%20when%20MACD%20crosses%20above%20its%20signal%20line%20and%20RSI%20is%20above%2050%3B%20exit%20when%20MACD%20crosses%20back%20below%20its%20signal%20line%2C%20on%201D%2C%20last%203%20years.&parse=1

**Takeaway:** Prefer event style signals (crosses, breakouts) over state style signals, and combine a trend check with a momentum check to trade fewer, better setups.

## Check yourself

Which of these is an event, not a state?

1. MACD crosses above its signal line
2. MACD is positive
3. RSI is above 50

Answer: 1. A cross happens once. 'Is positive' and 'is above 50' can stay true for weeks, which would re enter the same trade every bar.

Terms used: [macd](https://www.texttoquant.com/academy/glossary#macd), [rsi](https://www.texttoquant.com/academy/glossary#rsi), [moving-average](https://www.texttoquant.com/academy/glossary#moving-average)