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Trading Strategies Based on Technical Indicators

Out of the various ways of trading in the Stock market, the trading on the basis of technical analysis is the most promising one. There are many indicators which are studied in the Technical analysis. The most common indicator is moving average which is simple one too. The moving average shows the general trend of the market. If the moving average is heading upwards the trend is upward and if the moving average is heading downward the trend is a downtrend. There are two types of moving averages, the simple moving average and the exponential moving average. The simple moving average gives a slower response than the exponential moving average.

The common strategy used with the moving average is to draw two moving average of different periods. The crossover of the two moving average indicates the potential chances of crossover. A similar indicator is MACD. The MACD stands for the Moving average convergence and divergence. The indicator also shows the convergence and divergence of two moving averages. Here also the crossover of the two moving average is seen as the chance for entering the trade. The appropriate buy and sell calls can be placed at these signals.

Besides the above indicators which are the momentum indicators the other category is of oscillators. These oscillators continuously oscillate between the high and low. The oscillator indicators are the RSI and Bollinger bands. The RSI is an indicator which shows the overbought and oversold levels. The RSI stands for relative strength index and takes the value between 0 and 100. The values near 0 are the oversold levels and the values near 100 are considered as overbought levels.

There are lots of advisory firms which offer stock market tips to the traders. Money Classic Research is one such advisory firm which is SEBI registered and also ISO certified.

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