For those who are serious about trading, one has to make sure that he has the essential knowledge and tools to become profitable in the long run. These tools are the indicators that one can use in order to see the price action of a commodity, stock, or currency pair. For those who are beginners, here are a few day trading tools that one can add to his arsenal as a trader.
The first tool that one can use is the RSI or the relative strength index. When one invests in a stock or commodity, the price action is based on supply and demand. The RSI will tell the trader if a stock or a commodity is overbought or oversold. Once it becomes overbought the tendency is for the price to go down while if it is oversold, the price usually goes up.
If one would want to spot the overall trend of a chart, then one can make use of the popular 200 EMA. The 200 EMA is a moving average that runs through the chart and points out where the price is going. Generally, if the EMA 200 is going up, the trend is up and the opposite happens if it is going down.
Also, one will be able to determine what kind of trades to look for by looking at the EMA 200. If the price is above the EMA 200, traders usually just focus on looking for buy signals. If the price is below, then the traders will look for sell signals.
Another tool that one can use is the MACD which is a tool that pits together all the averages into one indicator. The MACD is made out of two moving averages and a histogram in the middle. When the two moving averages cross and they move downward, then it is shows a sell signal but if these two moving averages cross from the bottom going up, then it is a buy signal.
Bollinger bands are also really helpful in telling when exit a trade. The general rule to follow when using the Bollinger band as an exit strategy is to make sure to exit when the price hits either the north Bollinger band or the south Bollinger band. Once the candlestick hits, the tendency for the price is to fall back into the middle Bollinger band.
Other than an exit strategy, the Bollinger Bands can be used as an entry strategy if used together with an EMA 5. If the EMA 5 crosses the middle Bollinger Band and is moving downward, then it is a sell signal. If the EMA 5 crosses the Bollinger Band going upward, then it is a buy signal.
For those who are interested in investing in stocks, commodities, or currency pairs, never forget these indicators. These indicators are very easy to use and they are also very useful. If one would want to be very profitable in his trades, then he might as well make use of these tools to help him know whether he should enter into a buy trade or a sell trade for his investment medium.
The first tool that one can use is the RSI or the relative strength index. When one invests in a stock or commodity, the price action is based on supply and demand. The RSI will tell the trader if a stock or a commodity is overbought or oversold. Once it becomes overbought the tendency is for the price to go down while if it is oversold, the price usually goes up.
If one would want to spot the overall trend of a chart, then one can make use of the popular 200 EMA. The 200 EMA is a moving average that runs through the chart and points out where the price is going. Generally, if the EMA 200 is going up, the trend is up and the opposite happens if it is going down.
Also, one will be able to determine what kind of trades to look for by looking at the EMA 200. If the price is above the EMA 200, traders usually just focus on looking for buy signals. If the price is below, then the traders will look for sell signals.
Another tool that one can use is the MACD which is a tool that pits together all the averages into one indicator. The MACD is made out of two moving averages and a histogram in the middle. When the two moving averages cross and they move downward, then it is shows a sell signal but if these two moving averages cross from the bottom going up, then it is a buy signal.
Bollinger bands are also really helpful in telling when exit a trade. The general rule to follow when using the Bollinger band as an exit strategy is to make sure to exit when the price hits either the north Bollinger band or the south Bollinger band. Once the candlestick hits, the tendency for the price is to fall back into the middle Bollinger band.
Other than an exit strategy, the Bollinger Bands can be used as an entry strategy if used together with an EMA 5. If the EMA 5 crosses the middle Bollinger Band and is moving downward, then it is a sell signal. If the EMA 5 crosses the Bollinger Band going upward, then it is a buy signal.
For those who are interested in investing in stocks, commodities, or currency pairs, never forget these indicators. These indicators are very easy to use and they are also very useful. If one would want to be very profitable in his trades, then he might as well make use of these tools to help him know whether he should enter into a buy trade or a sell trade for his investment medium.
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