Stock Trading Indicators

The field of online investing is quite advanced. It is no secret that nowadays this sector provides people with unlimited opportunities for trading online. Undoubtedly, the most popular platform traders choose to try their luck and to apply their knowledge is on the stock trading market.

As a result, many people decide to spend a lot of time in looking for the right second to place a trade.

In order for investors to become really successful they should know that there is a great variety of indicators that can help them determine the best time to buy or sell stocks and shares. As it may have crossed your mind the existence of these proven date shows that this market is not a random term but something with really high potential for realizing great results.

In the following article we are going to share with you more information regarding some of the best indicators. Their use is a sure sign that your trading strategies are going to be successful.

To start with, we would like to mention the important truth related to the fact that the best indicator is the one that fits best to your personal needs and trading style. This comes to show that there is actually not a single and complex best indicator that can equally satisfy all investors and their goals. Still, there is a great variety of available tools you can choose from in order to discover your best partner. Continue reading the following paragraphs if you want to learn more about some of the best and most popular strategies on the market.

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Simple Moving Average (SMA)

Basically, this is the average price of an asset for a specific time frame. The main function of this indicator is to smooth the movements of the price and thus to identify the trend. In addition, this indicator is lagging as it takes into consideration the prices from the past and generates signals as soon as the trend begins. So, keep in mind that the longer the covered time frame is, the greater will be the smoothing. Therefore, the reaction to changes in the market will be considerably slower. In other words, this is not the best indicator for advance warning. However, you can take advantage of it in case you need to confirm a trend.

Exponential Moving Average (EMA)

In comparison to SMA this indicator focuses on more recent prices so it responds way more quickly to price changes. The most frequently used long-term averages for this tool are 50-day and 200-day EMAs. 12-day and 26-day EMAs are more suitable for short-term averages. There is a very simple system of trading with them as investors should place a trade each time the two moving averages cross. Also, you should remember, that you should buy when the shorter moving average crosses above the slower, and you sell when the opposite process happens.

Still, this indicator is not recommended for traders who don’t want to be in the market all the time.

MACD

The moving average convergence/divergence is designed to gauge momentum. Not only it can identify a trend in the market, it can also measure its strength. Many traders consider it as the best trading indicator, especially when it comes to the feel of strength behind your particular move. The indicator puts two lines on the chart of the prices. When the line goes below the line of the signal, this means a sell signal. A buy signal is available when the line crosses above the line.

These are some of the main and most commonly used trading indicators. We know that at first it may sound a little bit difficult but once you enter the field of online investing you will gradually start to understand their logic and useful effect.

The most important thing traders should achieve is to find the indicators combination which suits them the most. This is the only way they can make online investments in the field of trading. This is not an easy task to be accomplished but many people succeed so you can do it, too. Just spend some of your spare time in learning how to follow the trends and to make the best use out of their change and the market’s movement.