If you want to boost the profits of your portfolio, then you need the help of the best trading indicators available to you. Perhaps it is a wise decision to invest some of your hard-earned cash so it can multiply a hundredfold without you doing any laborious physical work. Investing in the stock market may be one of the most lucrative options out there.
It is not very difficult to learn about theonce you are in the stock market or Forex. With time and dedication you can even master the best technical indicators that will help you land the best moment to trade to gain the most profits.
How do Technical Indicators Help Traders
The basic information that a trader can get from technical indicators is the most probable price changes of a stock or currency. In other words, these can help you predict future prices of stocks which will let you buy and sell accordingly. Another helpful aspect of technical indicators is that they can help you determine a breakout, resistance and support.
To simplify further, technical indicators are your guide on what stocks or currencies to buy, when to buy them and when to sell them for the best profit gains. They are more like hints that give you ideas on what is going to happen next.
Indicators indicate, obviously,direction of future prices.
Types of Technical Indicators
There is a wide range of technical indicators that can be used. But the one thing that they have in common is they make use of mathematical formula to analyze past market prices. The resulting calculations that they provide can then be interpreted by the trader and applied to predict potential future market direction.
1. Momentum – The momentum indicator guides traders on whether the market is currently on a momentum in terms of activity. If the momentum is on selling then the prices of stock and currency prices are low since few are buying them. But when the momentum is on buying prices are expected to go up since the demand is high.
This is where MA becomes useful. MA is used to smooth the stock’s price movements by plotting an average price of the stock on the charts. It may be the day’s average, or average of day’s high, day’s low, or day’s opening or closing price. The MA is then observed over a period of time. Thereafter, a number of theories can be applied to the MA curves on the chart.
2. Volume – The stock and currency markets move a lot on any given trading day. But when the movement is high it could mean that there is volume. This means that a lot of people and corporations are buying and selling. Volume indicators signal traders of this market condition alerting them to look at which stocks and currencies are selling and which ones are purchased.
3. Trend – As the name implies, trend indicators are about the direction of the currency and stock markets. When the trend shows that the market is going down, traders will not sell but buy the good stocks and currencies whose prices have gone down. And when the market trend is now upward, the traders will now start selling the stocks and currencies that they previously purchased at cheaper prices.
4. Volatility – Every experienced trader knows that stock and currency prices go up and down a lot during a trading day. But there are also times when the prices are so volatile that prices either go down so low or up so high. Volatility indicators help traders determine these sudden highs and lows that go beyond the normal values. It is usually during these times that a trader could earn a fortune.
5. Moving Average – The first thing that any trader notices in the stock and currency markets is that prices fluctuate a lot. And when you list each highs and lows in prices one can determine the averages. The moving average is what you get when you take into account the average price of a stock or currency in a period within a trading day. As a technical indicator, traders use it to determine if there is an upward or downward momentum.
Expert traders use all these technical indicators to make good profit whether its in the stock market or in the Forex. As a beginner it is essential to pick the indicators that fit your style and your learning curve. This way the process of mastering trading using the chosen technical indicators becomes smooth and easier to complete.
With proper training and time any new trader will be able to make good use of these technical indicators. Determining the best ones is a matter of personal choice which depends of the style of each trader. So try out each technical indicators so that you can find the best ones for you.
Jessie Lorion writes for currency trading and on how to use technical indicators effectively to improve your gains.where you can find useful information on stock and