What is diff and dea in trading

In trading, "DIFF" and "DEA" are technical indicators used in technical analysis. They are part of a larger indicator called the Divergence Indicator, which helps traders identify potential trend reversals or continuations in the market.

The DIFF indicator is calculated by subtracting the closing prices of a shorter-term moving average (typically 12 days) from a longer-term moving average (typically 26 days). This value is then plotted as a line.

The DEA (Divergence) indicator is calculated by subtracting the closing prices of a 9-day moving average from the DIFF indicator. This value is also plotted as a line.

Traders use these indicators to identify potential buy or sell signals. If the price of the security is rising and the DIFF line is falling, it may indicate a bullish signal, as the shorter-term average is rising faster than the longer-term average. Conversely, if the price is falling and the DIFF line is rising, it may indicate a bearish signal.

Overall, the DIFF and DEA indicators are useful tools for traders to assess market trends and make informed trading decisions.