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Lenders who provide VA home loans often offer better terms than a borrower might get with a conventional mortgage. Private mortgage insurance (PMI) isn’t required, interest rates may be lower than with other types of mortgages, and most VA-backed loans (90%) are made with no down payment.

Still, when you’re shopping for any type of mortgage, it can be helpful to have a good idea of where you stand and what your monthly payments might be. And that’s why a VA loan calculator table can be instrumental. By plugging in a few key numbers, you can feel better informed, whether you’re planning to buy a home or considering refinancing your current mortgage.

Why Use a VA Home Loan Mortgage Calculator Table?

If you’re a veteran, service member, or eligible survivor interested in learning about a VA loan — which is one of the different types of mortgage loans available — a VA home loan calculator can help you estimate what your monthly payments might be based on data you provide.

You can see how a 15-year mortgage might differ from a 30-year mortgage, for example, or what different interest rates might mean for your monthly payments. You also can get an idea of how much you might pay in interest over the life of your VA home loan.


💡 Quick Tip: Buying a home shouldn’t be aggravating. SoFi’s online mortgage application is quick and simple, with dedicated Mortgage Loan Officers to guide you throughout the process.

How to Calculate Your VA Home Mortgage Loan Payment

To calculate your monthly VA mortgage payment with a VA loan calculator table, you’ll need to gather up a few key pieces of information, including:

Home Purchase Price

This can be the actual cost of a home you hope to buy, or what you’ve budgeted for your home purchase.

Down Payment Amount

For most eligible veterans and service members, this amount will be $0.

Loan Term

This is the expected length of your loan, usually 15 or 30 years.

Interest Rate

You won’t know your exact interest rate until you lock it in with your lender, so this will be an estimate. Lenders base their rates on current market rates, a borrower’s credit profile, and other factors.)

Property Tax Rate

If you have a particular home in mind to purchase, the tax rate may appear on the listing. You also can look for property tax rates on county websites.

The formula used to calculate a mortgage payment can be complicated, so it may be easier to use a VA home loan calculator to check how changing various numbers might affect your loan. Our VA Loan Mortgage Calculator Table, with averages used below in various fields, also can help you see what your payments might look like.

2024 VA Home Loan Mortgage Calculator Table
Purchase Price	$210,000	$375,000	$675,000
Down Payment	$0	$0	$0
Avg. Property Tax Rate*	1.45% (St. Louis)	1.15% (Tampa)	.82% (Los Angeles)
PMI:	$0	$0	$0
Interest Rate	9%	7%	5%
Loan Term	15-year/30-year	15-year/30-year	15-year/30-year
Estimated Payment	$2,384/$1,943	$3,730/$2,854	$5,799/$4,085
Principal & Interest Monthly	$2,130/$1,690	$3,370/$2,495	$5,338/$3,624
Taxes Monthly	$254	$359	$461
Total Interest Paid	$173,393/$398,290	$231,709/$523,162	$285,814/$629,475

*Property tax exemptions and special tax districts may apply

Examples from the VA Home Mortgage Calculator Table

Because VA-backed loans don’t require mortgage insurance, and most don’t require a down payment, the main factors that will influence your monthly mortgage payment are the amount of the loan, the interest rate you pay, and the length of the loan.

As you can see from the VA loan affordability calculator table above, borrowers can get a smaller, more manageable monthly payment if they opt for a longer loan term. But they’ll pay more in interest than they would if they had a shorter term. Using the Tampa home as an example, the estimated monthly payment would be $2,854 with a 30-year term, vs. $3,730 with a 15-year loan. But the total amount of interest paid for the 30-year loan could end up being more than twice as much: $523,162 vs. $231,709.

And, of course, the cost of the home you choose to buy can also be an important factor. As shown in the table, even with a much higher interest rate, both the monthly payment and total interest paid for the home in St. Louis would be lower than for the home in Los Angeles — simply because the cost of living in California is high and the St. Louis home is less expensive.

It can be helpful to check the cost of living by state if you’re deliberating between two different locations for your next home.


💡 Quick Tip: Active duty service members who have served for at least 90 consecutive days are eligible for a VA loan. But so are many veterans, surviving spouses, and National Guard and Reserves members. It’s worth exploring with an online VA loan application because the low interest rates and other advantages of this loan can’t be beat.†

Other Costs to Consider

Most VA loan mortgage calculators stick to the basics, but there are other costs you may want to consider when you’re trying to determine the monthly loan payment you can afford, including:

VA Funding Fee

Though borrowers don’t pay mortgage insurance on a VA loan, most will pay a one-time funding fee. (Some borrowers are exempt.) The fee, which can be paid upfront or rolled into the loan, is a percentage of the loan, and is based on the type of loan and other factors.

Homeowners Insurance

Homeowners insurance can help protect your home and property in case of expensive damage and other potential costs. Your lender will likely require that you buy homeowners insurance before you close on your home purchase.

HOA Fees

If the home you purchase is part of a homeowner’s association (HOA), you may have to pay a monthly or annual fee. The HOA may use this money to cover maintenance costs and amenities.

VA Home Loan Limits

Typically, the VA guarantees that it will repay the lender up to 25% of your loan amount if you should fail to make your payments. But if you’re still paying off another VA loan, your VA guarantee may be limited, and the lender may ask you for a down payment to make up the difference. Your lender can help you determine how VA home loan limits might affect your new loan.

Recommended: 2024 Home Loan Help Center

Reasons to Calculate Your VA Home Mortgage Loan First

You may want to calculate the monthly payment and interest costs for your VA loan first, then compare those numbers to other types of loans – especially if you’re a first-time buyer who’s struggling to come up with a down payment. Your VA loan may come with a lower interest rate, and you won’t have to pay private mortgage insurance, which can keep your payments lower. Your lender also may accept a lower credit score if you’re applying for a VA loan vs. a conventional loan.

Still, it can be a good idea to compare all the different types of mortgage loans for which you might be eligible. If you can afford to make a 20% down payment on a conventional loan, for example, you can avoid the VA funding fee, and you’ll have some equity in your home right away. It doesn’t hurt to keep your options open, whether you’re buying a home or refinancing your mortgage.

Tips on How to Save on Your VA Home Mortgage Loan

To get the best VA loan payment, these are a few strategies that could help you save money.

Work on Your Credit

There isn’t a required minimum credit score for VA loans. Instead, the VA asks approved lenders to review the borrower’s “entire loan profile,” which could include your credit history, debt-to-income (DTI) ratio, employment history, and assets.

Individual lenders also may have their own approval criteria you should be aware of when you’re ready to apply for a loan. The more you can do to improve your financial health, the better the chances that you’ll get the loan terms you want.

Consider Making a Down Payment

Most borrowers don’t have to make a down payment on their VA home loan, but that doesn’t mean you can’t. Putting a down payment on your loan could show the lender that you’re a serious buyer, which may help you get a lower interest rate or reduce the VA funding fee on your loan.

Roll Your VA Funding Fee into Your Loan

If you’re a first-time homebuyer or low on cash for closing, the VA’s one-time funding fee may seem like a daunting amount. But you don’t have to pay the entire fee upfront. You can ask your lender to include that amount in your loan, and it will be added to your monthly payments. Your payments will be a bit more, but it may make the difference in being able to buy a home of your own.

Recommended: Tips to Qualify for a Mortgage

The Takeaway

Because VA home loans have some different requirements and benefits than other mortgages, it can be helpful to get an idea of what those differences might mean for your monthly payment and overall loan by using a VA loan calculator table.

If you’re preparing to buy or refinance a home, a VA mortgage loan calculator table can give you a useful estimate of what your new loan might look like, depending on your loan amount, length, interest rate and other factors.

SoFi offers VA loans with competitive interest rates, no private mortgage insurance, and down payments as low as 0%. Eligible service members, veterans, and survivors may use the benefit multiple times.

Our Mortgage Loan Officers are ready to guide you through the process step by step.

FAQ

Will VA home loan limits increase in 2023?

Yes, VA home loan limits increased significantly in 2023. The baseline limit for VA loans in 2023 is $726,200, compared to $647,200 in 2022.

How much do I need to make to buy a $300,000 house with a VA loan?

Your income is only one factor that goes into deciding how much you can afford to borrow. Lenders also will look at your debt-to-income (DTI) ratio, which is the amount of your monthly debt payments compared to your monthly gross income. The VA doesn’t have a required DTI ratio for borrowers, but a maximum DTI of 41% is preferred.

What is the VA benefit increase for 2023?

Military retirees and disabled veterans got an 8.7% increase in their monthly checks in 2023, thanks to the annual adjustment to the federal cost of living allowance.

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Photo credit: iStock/joel-t

SoFi Mortgages
Terms, conditions, and state restrictions apply. Not all products are available in all states. See SoFi.com/eligibility for more information.

SoFi Loan Products
SoFi loans are originated by SoFi Bank, N.A., NMLS #696891 (Member FDIC). For additional product-specific legal and licensing information, see SoFi.com/legal. Equal Housing Lender.

^†Veterans, Service members, and members of the National Guard or Reserve may be eligible for a loan guaranteed by the U.S. Department of Veterans Affairs. VA loans are subject to unique terms and conditions established by VA and SoFi. Ask your SoFi loan officer for details about eligibility, documentation, and other requirements. VA loans typically require a one-time funding fee except as may be exempted by VA guidelines. The fee may be financed or paid at closing. The amount of the fee depends on the type of loan, the total amount of the loan, and, depending on loan type, prior use of VA eligibility and down payment amount. The VA funding fee is typically non-refundable. SoFi is not affiliated with any government agency.
Third-Party Brand Mentions: No brands, products, or companies mentioned are affiliated with SoFi, nor do they endorse or sponsor this article. Third-party trademarks referenced herein are property of their respective owners.

Financial Tips & Strategies: The tips provided on this website are of a general nature and do not take into account your specific objectives, financial situation, and needs. You should always consider their appropriateness given your own circumstances.

Disclaimer: Many factors affect your credit scores and the interest rates you may receive. SoFi is not a Credit Repair Organization as defined under federal or state law, including the Credit Repair Organizations Act. SoFi does not provide “credit repair” services or advice or assistance regarding “rebuilding” or “improving” your credit record, credit history, or credit rating. For details, see the FTC’s website .

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It’s not news that FHA (Federal Housing Administration) loans can be a great way for first-time homebuyers to break into the market. They’re government-backed and tend to come with lower costs and less-stringent eligibility requirements.

But like any mortgage, FHA loans do still come with closing costs — expenses due at the time the mortgage is signed — which can add up to a pretty penny. It’s a good idea to know what you’re getting into ahead of time with closing costs to avoid sticker shock, which is exactly why you’re here.

Keep reading to learn such intel as:

•   How to figure out your FHA loan closing costs

•   What is an FHA loan closing cost calculator

•   How to use a calculator table to determine your FHA loan closing costs

•   How to lower your FHA loan closing costs.

Why Use an FHA Loan Closing Costs Calculator Table?

Closing costs for FHA loans (a kind of government loan) are made up of several different expenses, including lender fees, third-party fees, and prepaid items. Each of these categories of expenses is composed of smaller costs.

For example:

•   Lender fees might include an origination fee, underwriting fee, document preparation fee, and other charges.
Third-party fees might include an appraisal fee and real estate attorney fees, just to name a couple.

•   That is a lot of instances of the word “fee.” And that’s before you factor in the mandatory FHA mortgage insurance premium, or MIP — which is basically the FHA version of private mortgage insurance (PMI).

That’s why using an FHA loan closing costs calculator table can be an efficient way to see, at a glance, a ballpark range of what you might expect to plunk down on the closing table. Of course, the best way to know exactly what to expect is to calculate all of your FHA loan closing costs by hand. Or to ask your lender to share the expected or actual fees involved.


💡 Quick Tip: Buying a home shouldn’t be aggravating. SoFi’s online mortgage application is quick and simple, with dedicated Mortgage Loan Officers to guide you throughout the process.

How to Calculate Your FHA Loan Closing Costs

To calculate your specific FHA loan closing costs, you’ll need to add up all the smaller costs — which means ascertaining exactly what they are. Asking your lender is a great way to do this for these government-backed mortgages, whether you’re a first-time homebuyer or beyond. Your lender should even be able to tell you the overall cost without your needing to calculate it yourself.

As a general rule of thumb, closing costs tend to amount to about 3% to 6% of the amount you borrow. In other words, if you were buying a million dollar home and putting down $700,000, your mortgage would be $300,000, and your closing costs would be between $9,000 and $18,000.

If you were buying a home that costs $330,000 and putting down $30,000, your home loan would again be $300,000, and your closing costs would be similar to the range above.

Calculating MIP

Now, here are more details about the MIP portion:

•   With an FHA loan, you can expect to pay 1.75% of the loan amount in MIP upfront.

•   It may be possible to finance your upfront MIP by adding it to your overall loan, but doing so will likely increase the amount you pay in interest over time.

•   In addition, you will pay an ongoing premium as part of your monthly payment that ranges from 0.15% to 0.75% of your home’s outstanding loan balance annually.

Below, you’ll find a chart that shows a range of possible down payments and closing costs on FHA loans.

Recommended: Cost of Living by State

2024 FHA Loan Closing Costs Calculator Table

Here’s a basic guide to approximately how much you can expect to pay in closing costs if you take out an FHA loan in 2024, depending on the cost of your home. (Actual figures may vary, but this serves as an overall FHA loan closing cost calculator.)

Home Price	3.5% Down payment	10% Down payment	MIP due at closing (1.75%) with 3.5% down	MIP due at closing (1.75%) with 10% down	Overall Closing Costs (3% to 6%, including MIP) with 3.5% down	Overall closing costs (3% to 6%, including MIP) with 10% down
$200,000	$7,000	$20,000	$3,377.50	$3,150	$5,790 – $11,580	$5,400 – $10,800
$350,000	$12,250	$35,000	$5,910.63	$5,512.50	$10,125 – $20,250	$9,450 – $18,900
$500,000	$17,500	$50,000	$8,443.75	$7,875	$14,475 – $28,950	$13,500 – $27,000

As you see, when you put more money down, your home loan is smaller, and closing costs can be reduced somewhat.

Recommended: Guide to FHA 203(k) Home Loans

Examples of FHA Loan Closing Cost Calculations

So, how do such seemingly small percentages add up so quickly?

Here are some examples of the types of fees that add up to that 3% to 6% in closing costs. This percentage tends to apply to different kinds of home loans, including FHA ones:

•   Lender fees. Your lender is in business to make money, and may charge various fees associated with the service of originating, writing, and maintaining the loan, such as:

◦   Loan origination fee: 0.5% to 1% of your home loan total

◦   Underwriting fee: $300 to $900+

◦   Document preparation fee: Up to $100

•   Third-party fees. From getting your property appraised to finding and insuring your title, there are plenty of third-party fees that crank up your closing cost total.

◦   Appraisal fee: $600 to $2,000

◦   Survey fee: $500

◦   Real estate attorney fee: $500 to $1,500

◦   Title search fee: $75 to $200

◦   Title insurance: 0.5% to 1% of your home purchase price

◦   Recording fees: $125

•   Prepaid items. As part of signing, you’ll also need to pay a certain number of items upfront, such as your first year’s worth of homeowners insurance to be held in escrow. These costs vary depending on your home’s location and overall value, but they can be substantial. They can include:

◦   Real estate taxes

◦   Tax and insurance escrow deposits

◦   Flood, earthquake, or hazard insurance premiums

•   MIP: As mentioned above, this will be 1.75% of the loan amount, though some borrowers may roll it into the loan amount).

As you can see, FHA loan closing costs can really add up — but it can be worth it to have a home to call you very own.


💡 Quick Tip: Backed by the Federal Housing Administration (FHA), FHA loans provide those with a fair credit score the opportunity to buy a home. They’re a great option for first-time homebuyers.

Reasons to Calculate Your FHA Loan Closing Costs First

If you’re searching for your dream house and accessing a home loan help center, that’s terrific. Be sure to also focus on understanding how much you may pay in closing costs. This can help you know how much house you can really afford to buy.

Often, buyers get so caught up in trying to save up for their down payment that they forget about closing costs entirely. This lump sum, which is often five figures, could be a pretty upsetting thing to be surprised by as you move towards signing.

Calculating your closing costs ahead of time will help ensure you’ve actually saved up enough to comfortably make your home purchase. Your lender is required to offer you a closing statement before it’s time to sign the deal.

That said, the more preplanning you can achieve when it comes to these amounts of money, the better. You may want to use a closing cost FHA loan calculator (look online for tools that can help) so you can get a feel for these numbers.

Tips on How to Save on Your FHA Loan Closing Costs

If you are planning on buying a home, you are probably researching tips to qualify for a mortgage. In addition, you may want to consider ways to lower the overall expense of closing costs.

Yes, closing costs can be a hefty chunk of change. Fortunately, there are a few ways to help lower your closing costs and usher you over the threshold into homeownership.

•   Negotiate with the seller. If the person you’re buying the house from is eager to let it go, they may be willing to pay some — or even all — of your closing costs on their end.

•   Ask for a gift. Not all mortgages allow gift funds to be used for closing costs, but FHA loans do. If you have a friend or family member who is willing to offer a sum of money, you could consider using gift funds to lower your costs.

•   Roll them into the mortgage. As with MIP, it can be possible to roll some of the remainder of your closing costs into your mortgage. Keep in mind that doing so can raise your monthly payment and mean you pay more in interest overall.

The Takeaway

FHA loans do come with closing costs, and most buyers can expect to pay about 3% to 6% of the loan amount at signing. This type of mortgage in particular requires a mortgage insurance premium (MIP) of 1.75% of the loan amount closing, which can drive up the overall price of FHA loans upfront.
Despite these charges, FHA loans can be an important option for many borrowers as they move along the path to homeownership.

SoFi offers a wide range of FHA loan options that are easier to qualify for and may have a lower interest rate than a conventional mortgage. You can down as little as 3.5%. Plus, the Biden-Harris Administration has reduced monthly mortgage insurance premiums for new homebuyers to help offset higher interest rates.

Another perk: FHA loans are assumable mortgages!

FAQ

Who pays the closing costs on an FHA loan?

Traditionally, closing costs are the responsibility of the buyer. However, it is possible to ask the seller to pay closing costs as part of your negotiation. (Keep in mind that this probably won’t work in a highly competitive seller’s market, though.)

How much FHA loan can I qualify for?

The amount you qualify for will depend on personal financial data like your income and credit score. That said, it’s also important to understand that the FHA does impose loan limits that cap the maximum amount borrowers can take out. In 2023, the FHA loan limits for a single-family housing unit are $472,030 in most areas of the country, and up to $1,089,300 in specific, high-cost counties.

Can closing costs be included in an FHA loan?

Some of your FHA loan closing costs, including the upfront MIP, can be rolled into your mortgage, but keep in mind doing so will increase your monthly payment and also mean spending more in interest over time. And note that you can’t include your down payment in the loan. The minimum FHA loan down payment is 3.5%. Using a closing cost FHA loan calculator can help you estimate your expenses.

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Photo credit: iStock/ridvan_celik

^¹FHA loans are subject to unique terms and conditions established by FHA and SoFi. Ask your SoFi loan officer for details about eligibility, documentation, and other requirements. FHA loans require an Upfront Mortgage Insurance Premium (UFMIP), which may be financed or paid at closing, in addition to monthly Mortgage Insurance Premiums (MIP). Maximum loan amounts vary by county. The minimum FHA mortgage down payment is 3.5% for those who qualify financially for a primary purchase. SoFi is not affiliated with any government agency.
SoFi Mortgages
Terms, conditions, and state restrictions apply. Not all products are available in all states. See SoFi.com/eligibility for more information.

SoFi Loan Products
SoFi loans are originated by SoFi Bank, N.A., NMLS #696891 (Member FDIC). For additional product-specific legal and licensing information, see SoFi.com/legal. Equal Housing Lender.

Financial Tips & Strategies: The tips provided on this website are of a general nature and do not take into account your specific objectives, financial situation, and needs. You should always consider their appropriateness given your own circumstances.

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Using technical analysis to research stocks is a common strategy to profit from short-term movements in security prices. While some stock analysis tools are fundamental in nature, technical stock indicators typically seek patterns in past price and volume data to give investors and traders insights about how a stock might move in the future.

Naturally, every stock indicator has its pros and cons. Technical indicators can be used by traders to analyze supply and demand forces on stock price, to help investors to understand market psychology, or to manage risk. But while stock indicators and trading tools can help with buy and sell points, false signals can also occur.

For that reason, although technical indicators can assist with trend identification, it’s best to combine different indicators when conducting your stock analysis.

Learn more about the pros and cons of using the following 15 trading tools in your strategy.

How Do Stock Technical Indicators Work?

Technical analysis uses various sets of data and indicators, such as price and volume, to identify patterns and trends. It does not use fundamental analysis to look at the underlying companies, their industries, or any macroeconomic trends that might drive their success or failure.

Rather, technical analysis solely analyzes a stock’s performance. Technical indicators are often rendered as a pattern that can overlay a stock’s price chart to predict the market trend, and whether the stock would be considered “overbought” or “oversold.”

One of the basic tenets of technical analysis is that history tends to repeat itself. By examining certain patterns in light of past outcomes, analysts can make an educated guess about where stock prices might be headed. That said, past performance is never a guarantee of future stock price movements, so traders must bear this in mind.

Knowing many of the most popular trading tools might benefit your investing strategy with easier to spot buy and sell signals. You don’t have to know every single technical indicator, and there are many ways to analyze stocks, but using multiple stock indicators may improve trading results. You can also use these stock indicators to help you manage risk when you are actively trading.

Trend indicators are some of the most important technical trading tools since identifying a security price’s trend is often a first step to forming a strategy. Long positions are often initiated during uptrends, while short sale ideas can occur when prices are in an established downtrend.

Volume technical indicators are also helpful to gauge the power or conviction of an asset’s price move. Some believe that the higher the stock volume on a bullish breakout or bearish breakdown, the more confident the move is. Higher volume could signal a lengthier trend continuation.

Two Types of Technical Indicators

Technical indicators generally come in two flavors: overlay indicators and oscillators.

Overlay Indicators

An overlay indicator typically overlays one trend onto another on a stock chart, often using different colors to distinguish between the lines.

Oscillator Indicators

On a technical analysis chart, an oscillator tracks the distance between two points in order to gauge momentum. The moving average is a common oscillator; it’s considered a lagging indicator as it measures specific intervals in the past.

An oscillator indicator can help traders determine support and resistance in certain price trends, so they can decide whether to sell or buy.

Oscillator indicators can be leading or lagging:

•   A leading indicator tracks current market movements to anticipate where the trend is headed next.

•   A lagging indicator is based on recent history and seeks patterns that will indicate potential price movements.

Top 15 Stock Indicators for Technical Analysis

It’s important to remember that these trading tools were developed based on the belief that mathematically derived patterns may be valuable as predictors of stock movements. Past performance, however, is not a guarantee of future results. So while it can be useful to employ stock technical indicators, they are best used in combination before deciding on a potential trade.

Also, many of these trading tools are lagging indicators, which can lead to an inaccurate reflection of current and future market conditions.

Following are 15 of the most common technical stock indicators, along with their advantages and disadvantages.

1. Moving Averages (MA)

A moving average (MA) is the average value of a security over a given time. The MA can be Simple Moving Average (SMA), Exponential Moving Average (EMA), and Weighted Moving Average (WMA).

A moving average smooths price volatility and is taken as an indicator of the direction a price may be headed. If the price is above the moving average, it’s considered an uptrend versus when the price moves below the MA, which can signal a downtrend. Moving averages are typically used in combination with each other, or other stock indicators, to identify trends.

Pros

•   Using moving averages can filter out the noise that comes from price fluctuations and focus on the overall trend.

•   Moving average crossovers are commonly used to pinpoint trend changes.

•   You can customize moving average periods: common time frames include 20-day, 30-day, 50-day, 100-day, 200-day.

Cons

•   A simple moving average may not help some traders as much as an exponential moving average (EMA), which puts more weight on recent price changes.

•   Market turbulence can make the MA less informative.

•   Moving averages can be simple, exponential, or weighted, which might be confusing to new traders.

2. Moving Average Convergence Divergence (MACD)

The Moving Average Convergence Divergence (MACD) also helps investors gauge whether a security’s movement is bullish or bearish, but it uses two different MAs to do so. Often, a 26-period exponential moving average is subtracted from a 12-period EMA to spot trading signals. Then a signal line, based on a shorter period EMA, is plotted on top of the MACD to help reveal buy and sell entry points.

Traders use the convergence or divergence of these lines to identify when bullish or bearish momentum is high.

Pros

•   The MACD, used in combination with the relative strength index (below) can help identify overbought or oversold conditions.

•   The MACD can be used to indicate a trend and also momentum.

•   Can help spot reversals.

Cons

•   May provide false reversal signals.

•   Responds mainly to the speed of price movements; less accurate in gauging the direction of a trend.

3. Relative Strength Index (RSI)

RSI is a tool that identifies bullish vs. bearish price momentum. The relative strength index is an oscillator — a tool that builds a trend indicator based on the price movement between two extreme values. It ranges from 0 to 100. Generally, above 70 is considered overbought and under 30 is thought to be oversold.

Pros

•   Can help investors spot buy or sell signals.

•   May also help detect bull market or bear market trends.

•   Can be combined with moving average indicators to spot breakout trends or reversals.

Cons

•   The RSI can move without exhibiting a clear trend.

•   The RSI can remain at an overbought or oversold level for a long time, making this tool less useful.

•   It does not give clues as to volume trends.

4. Stochastic Oscillator

The stochastic oscillator has two moving lines, or stochastics, that oscillate between and around two horizontal lines: The primary “fast” moving line is called the %K, while the other “slow” line is a three-period moving average of the %K line.

A signal is generated when the “fast” %K line diverges above the “slow” line or vice versa. The stochastic oscillator uses a 0 to 100 value range.The two horizontal lines are often pre-set at 30 and 70, indicating oversold and overbought levels, respectively, but can be modified.

Pros

•   Since it’s plotted on a 0 to 100 scale, it’s possible to gauge overbought and oversold levels.

•   Traders can adjust time frame and range of prices to reduce market fluctuation sensitivity.

•   Can be used by day traders.

Cons

•   A security can remain overbought or oversold for long periods as the range of oscillations is not always proportionate to a security’s price action.

•   It can be useful for implementing an overall strategy, but not for gauging the overall market sentiment or trend direction.

5. Williams %R

Similar to the stochastic oscillator, above, the Williams %R (a.k.a. the Williams Percent Range) is also a momentum indicator — but in this case it moves between 0 and -100 to identify overbought and oversold levels and find entry and exit points in the market. The Williams %R compares a stock’s closing price to the high-low range over a specific period, typically 14 days.

Readings between 0 and -20, which are in the top 20% of price during the look-back period, are considered overbought. Readings between -80 and -100, which are in the lowest 20% of price during the look-back, are considered to be oversold.

Pros

•   You can combine different short and long time periods to compare trends.

•   Identifies overbought and oversold levels.

Cons

•   False signals can happen if price strength or weakness leads to a brief movement in the Williams %R above 70% or below 30%.

•   There is no volume analysis with the Williams %R.

6. Bollinger Bands

Bollinger Bands are a set of three lines that help measure the relative high or low of a security’s price in relation to previous trades. The center line is the Simple Moving Average (SMA) of the stock price. The other two trendlines are plotted two standard deviations away from the SMA (one positively, one negatively). These can be adjusted.

The upper and lower lines show the high and low boundaries of the security’s expected price movement (90% of the time). The middle line shows real-time price action moving between those bounds as it fluctuates day-to-day.

Pros

•   Helps traders identify volatility.

•   Can help point to trading opportunities.

Cons

•   Large losses are possible when volatility surges unexpectedly.

•   Does not identify cycle turns quickly enough at times.

7. On-Balance Volume (OBV)

OBV is a little different from the other indicators mentioned. It primarily uses volume flow to gauge future price action on a security or market. When there’s a new OBV peak, it generally indicates that buyers are strong, sellers are weak, and the price of the security will likely increase. Similarly, a new OBV low is taken to mean that sellers are strong and buyers are weak, and the price is trending down.

The numerical value of the OBV isn’t important — it’s the direction that matters. Declining volume tends to indicate declining momentum and price weakness, while increasing volume tends to indicate rising momentum and price strength.

Pros

•   Volume-based indicator gauges market sentiment to predict a bullish or bearish outcome.

•   OBV can be used to confirm price action and identify divergences.

Cons

•   Hard to find definitive buy and sell price levels.

•   False signals can happen when divergences and confirmations fail.

•   Volume surges can distort the indicator for short-term traders.

8. Accumulation / Distribution Line (ADL)

The ADL is a momentum indicator that traders use to detect tops and bottoms and thus predict reversales. It does this by using volume versus price data to identify divergences and thereby show how strong a trend might be. For example: If the price rises but the ADL indicator is falling, then the accumulation volume may not actually support a true price increase and a decline could follow.

Pros

•   Traders can use the AD Line to spot divergences in price compared with volume that can confirm price trends or signal reversals.

•   The ADL can be used as an indicator of the flow of cash in the market.

Cons

•   Doesn’t capture trading gaps or factor in their impact.

•   Smaller changes in volume are hard to detect.

9. Average Directional Index (ADX)

The Average Directional Index (ADX) also helps investors spot asset price trends and to quantify the strength of those trends. ADX shows an average of price range values that indicate expansion or contraction of prices over time — typically 14 days, but it may be calculated for shorter or longer periods. Shorter periods may respond quicker to pricing movements but may also have more false signals. Longer periods tend to generate fewer false signals but may cause the indicator to lag the market.

The ADX uses positive and negative Directional Movement Indicators (DMI+ and DMI-). ADX is calculated as the sum of the differences between DMI+ and DMI- over time. These three indicators are often charted together.

Pros

•   Can help identify when price breakouts reflect a solid trend.

•   Can send signals to traders to watch the price and manage risk (e.g. thru divergences).

Cons

•   Can generate false signals if used to analyze shorter periods.

•   Can’t be used as a standalone indicator.

10. Price Relative / Relative Strength

Relative Strength should not be confused with the Relative Strength Index (above). Relative Strength is more of an investment strategy than a specific indicator. It involves comparing one asset to another or the broader market and helps traders find securities that are trending on a relative, not absolute, basis.

Pros

•   A stock indicator that helps compare one security’s price to another to find which is outperforming.

•   Can plot one stock versus a competitor or market benchmark.

Cons

•   Does not provide exact buy and sell levels.

•   False breakouts and breakdowns can happen.

•   Mean reversion can lead to losses for momentum traders.

11. Relative Volume (RVOL)

RVOL relays to traders how near-term volume compares to historical volume. The higher RVOL is, the more other traders might be paying attention to and trading the asset. Think of it as the stock being “in play.” Stocks that have a lot of volume have more liquidity and tend to trade better than stocks with low relative volume. The RVOL is displayed as a ratio.

So if it is showing 2.5 relative volume, that means it is trading at 3.5 times its normal volume for that time period.

Pros

•   Can offer clues to identify unusually powerful price moves.

•   High and low volume is easily detected by use of being above or below a value of one (1).

Cons

•   While volume is important, it does not give exact buy and sell price levels.

•   Volume surges can be fickle — like around an earnings date.

12. Rate of Change (ROC) and Momentum

ROC is just what it sounds like — the speed at which a stock is moving compared to its trend. The indicator measures a stock’s percentage price change compared to how it moved in recent periods. Like many of the tools mentioned, it can be used to spot divergences.

Pros

•   Works better in trending markets.

•   When used with other trading tools can help traders spot strong momentum.

•   A technical trading tool that can identify overbought and oversold levels.

•   Ideal for spotting divergences.

Cons

•   False signals can happen when the indicator suggests a price trend reversal will take place.

•   Does not give higher weight to more recent price action.

13. Standard Deviation

An asset’s standard deviation is a fundamental statistical tool to get a sense of volatility. It uses historical volatility to arrive at a percentage that is used to reflect how much a security moves. While volatility can indicate potential risk, it can also signal the potential for opportunity.

Pros

•   Mathematically captures the volatility of a stock’s movements, i.e. how far the prices moves from the mean.

•   Provides technicians with an estimate for expected price movements.

•   Can be used to measure expected risk and return.

Cons

•   Does not provide precise buy and sell signals.

•   Must be used in conjunction with other indicators.

14. Ichimoku Cloud

Ichimoku clouds are used to show support and resistance areas on a price chart in an extra-illustrative manner. An Ichimoku Cloud is comprised of five separate calculations that examine multiple averages, and uses the difference between two of the lines to create a shaded area (the cloud) that aims to predict support and resistance levels. It is also employed to identify momentum and trend. It is thought to provide more data than a simple candlestick chart.

Pros

•   A leading indicator of price.

•   Indicates support and resistance areas.

•   Useful for gauging the direction and intensity of a price trend.

Cons

•   Can give many false signals in trendless markets.

•   Can be confusing to traders given its complexity.

15. Fibonacci Retracements

Fibonacci Retracements are based on the golden ratio discovered by mathematician Leonardo Pisano in the 13th century. At its core, a Fibonacci retracement is a mathematical measurement of a particular pattern. The Fibonacci sequence and ratio are used to form support and resistance lines on a price chart.

Pros

•   Offers clues about where a stock might find support and resistance.

•   Helps define exit and entry levels.

•   Can be used to place stop-loss orders.

Cons

•   The use is subjective.

•   Some say Fibonacci Retracements are simply a self-fulfilling prophecy: if many traders are using these ratios, then outcomes will reflect this.

•   No logical proof of why it should work.

The Takeaway

Technical analysts use past price and volume data to help traders identify price trends and make buy and sell decisions. It’s important to know that technical analysis does not use fundamentals to assess the underlying companies, their industries, or any macroeconomic trends that might drive their success or failure. Rather, technical analysis solely analyzes a stock’s performance.

Technical indicators are often rendered as a pattern that can overlay a stock’s price chart to predict the market trend, and whether the stock would be considered “overbought” or “oversold.” There are countless stock technical indicators in existence, and it can quickly become overwhelming to learn them all. It might be more useful to focus on a handful of the most popular trading tools so you can execute a strategy that works for you.

To start trading stocks and gain a hands-on understanding of how technical indicators work, you can open a brokerage account online with SoFi Invest®. You can trade stocks, fractional shares, exchange-traded funds (ETFs), and IPO shares right from your laptop or phone. As a SoFi member, you will have access to many online resources — including financial professionals who can guide you in your financial journey. Get started now!

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