Chart Indicators
Chart indicators are patterns or moves that a trader uses to gauge future movement in the stock market. These may be based on a stock’s opening price, closing price, or the volume of trading between the two points. Most analysts have a few favorite indicators that they particularly trust and thus rely heavily upon.
Chart indicators basically give traders that watch them an indication of the direction of prices in the future. They may indicate prices increasing, decreasing, or stagnating. Based upon this, traders may buy or sell the stock in question to maximize their profit. Here are a few indicators that are watched for by many traders.
RSI: The Relative Strength Index compares the rise and fall in prices to past performance. This is one of the more common indicators.
Stochastic Oscillator: This indicator compares the closing price of a commodity to the price range of a specific time period. The price range can vary depending on which time interval you choose, and thus so can this indicator.
Moving Average: This indicator attempts to distill important information by taking several different averages of several different sets of information.
MACD: This stands for Moving Average Convergence/Divergence and uses the moving average information to form a line against which real time stick information is compared. This often can pinpoint trends before they happen.
These are just a few of the indicators commonly used by stock analysts. As you can see, there are many chart indicators, each with its own benefits and drawbacks. Deciding which are best for you is a very personal decision, but one that every trader must make in order to find success in a competitive market.
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