The time has gone when trader guess the trend based on the rumors around. Now Traders can calculate and predict the trend based on the Historical Data. It’s more on technical trading where the chances of losing money in Stock Market will be less. It’s all possible through technical tools for Market Trend Projection which suggest the trend of market. Tool as you need in every part of your life from cooking to playing, you also need to Trade well in Market with low risk. This article contains all the required information regarding Technical Tools for Market Trend prediction but If you want to go in more depth you can also refer your previous article with basically covers the fundamental understanding of Stock Market and different Trading Style.
Stocks Picking Strategies for Beginners – Fundamental Analysis, for knowing what things you should consider before picking up stocks to buy.
Best Way to Trade Support and Resistance: Technical Approach – A simple and powerful strategies to find out profitable level to buy stocks.
Which is better Forex or Stock Market: Pros and Cons – If you are beginner and confused which market is suits for you then you should read this blog post.
Simple Money Management Techniques – Know how to make a good money management strategies.
Prediction in financial markets are often profitable than investors or traders who does not predict markets before buying stocks. Either they do less analysis or make investment like gamblers. There are two ways to predict market first using fundamental analysis (Focusing on Companies news or major economic events) and technical analysis (Chart analysis). In this article you will know the best technical tools that are mostly used by professional traders around the world. There are many technical tools but we are focusing only on best technical tools to make this article not so long.
These are the tools you will find in every markets whether it is stock market, forex market, binary options or other derivatives.
Moving Average is one of the best technical tool every trader first considers it. It is the average of all the historical prices of stock shares or forex pair on a particular time frame. We are considering here daily time frame only. 200 days Moving average is mostly used by professional traders. You can also use 50 days or 10 days or 30 days moving average. Moving average predict trend of the market. If current price of market is above 200 days Moving Average, then we can say there is uptrend going on. You shall make buy orders only. For downtrend its opposite, when current price is below 200 Day Moving Average then you shall put only sell orders. Moving average also acts as dynamic support and resistance.
Relative Strength Index (RSI)
Relative Strength Index is a momentum technical tool. It predicts momentum of the market with oversold and overbought signal on particular stocks or forex pair. Relative Strength index have values from 0-100. When it is above 80 level then we can say that stock is overbought and when it is below 20 we can say stock is oversold. It can also be used to bullish momentum or bearish momentum. If RSI is above 50 return from prior oversold level, then there is bullish momentum and if is below 50 returning from prior overbought level then it is bearish momentum.
Moving average convergence divergence (MACD)
Moving average convergence divergence technical tool is difference of two moving averages. It has two lines fast and slow. Fast line is difference between 26 Day moving average and 12 Day moving average. Slow is the signal line. When the fast line crosses the slow line they there is buy signal and when slow line crosses the fast line then sell signal.
Support and Resistance
Support and resistance are areas where price movement either temporally slow or reverse. Professional traders always find the support and resistance level for making buy or sell orders. When the price is at support level we will buy stocks and when stock price is at resistance level then we will sell stocks. How to trade support and resistance level? Best Way to Trade Support and Resistance: Technical Approach is full dedicated post to which will guide you to make a profitable order.
All the above are mostly used technical tools by professional traders as well as beginners. Use moving average to find trend in the market, Relative strength index to for overbought or oversold signal, MACD for trend change signal using MACD divergence and support and resistance to entry or exit signal.