The term indicator refers to the representation of the behavior of a set of variables that identify patterns Trading System (marketing). To understand how you can benefit from the indicators is essential to remember that all markets are chaotic.
There are tools used by investors in the Trading System, to understand and interpret some technical indicators: Moving Average, RSI, MACD, Momentum, Stochastic Oscillator, etc. These work as a perfect alternative to a system based on the study of trends and are extremely useful, especially in the analysis of those characterized by a lack of clear market trend approach.
Some key factors that can impact the performance of the market and the Trading System in general, are related especially with wars or political and geographical environment, among others. For example, the US dollar was affected by the partial closure which is facing the US government.
Hence, due to the uncertain nature of the market, it is necessary to have adequate information to help assess what is the right to buy or sell: indicators. These basic data processing to allow trading strategies implemented in the Trading System.
Moving average indicator
This indicator is based on the simple moving average of the prices of a number of sessions. The basic analysis is based on cuts by the media. If prices are above average from below we get the buy signal. If the average is crossed from above then it is a sell signal. You can also enter combinations of means in different periods for greater efficiency in the Trading System.
Action indicators: MACD
A good example is the indicator Convergence Divergence Moving Average (MACD), whose basic function is to tell the operator if a stock is trending upward or downward by a pair of lines according to the performance of Trading System.
The first is the MACD line is the difference between two exponential moving averages (EMA). The second is the “signal line” which is the exponential moving average of the MACD line. The signal line is critical as the line drawn on the MACD, provides an indicator of when to buy or sell in the Trading System.
For example, when the MACD line crosses the signal line downwards, it indicates a downward trend and that it is time to sell.
The RSI is one of the most popular indicators used to invest in the Trading System despite trends. Shows signs of buying and selling on the market in most situations. The RSI is placed on the vertical scale from 0 to 100. The indicator value above 70 is a signal of an overbought market, however the fall in the indicator below 30 reports the sale on the market and Therefore possible change in trend.
When the RSI is in the field of buying or selling divergences between oscillator movements and price movements are observed. The differences in relation to the IHR may have a dual character and can suggest a possible increase or decrease in prices.
Positive differences (increases) – appear when the RSI, maintaining the trend of decline in the field, so other increasingly less pronounced declines, however the price chart conveniently located downs getting deeper. This situation suggests a potential upside rebound. In the Trading System, the RSI somewhat ahead of future price increases, generating a buy signal.
Negative divergences (low) – appear when the RSI, being in the field of buying sets other peaks, which are increasingly set at a lower level. Graphically, price spikes are placed each time at a higher level. The RSI, advancing somewhat future declines (increases) prices, suggests a turnaround downward (upward) and gives the signal to sell (buy) in the Trading System.
Maximizing indicators in the Trading System
Do not forget that indicators are not a prediction and need common sense and your judgment to determine the right time to buy or sell.
As a new operator in the Trading System, it is good idea to learn all the technical information as you can to make your life easier. One way to do this is by using a trading platform that includes an educational section so you can review the theory before you start implementing your own ideas; This way I will draw greater advantage of market indicators that you have at your disposal.
Like the RSI, it is an indicator which moves in the range of 0 to 100. In this indicator two lines are used:% K and% D. The main role has the% D line is the main source of signals. The% K and% D lines create the so-called fast stochastic oscillator, which is rarely used because of its excessive sensitivity. The Slow Stochastic Oscillator is the “standard” version of the fast, which is maintained by applying an average of three temporary units of lines% K and% D. The basic oscillator signals are the intersections of the lines% K and% D. To observe them must take into account the level to which they are. Field total sales for% D is below 30, while the golf cart is above 70. Sell signals are normally generated when the% K (fast) line crosses from above the line D% I decline. The buy signal occurs when the% K line crosses the% D line and begins to rise. As in the case of RSI, the main problem to analyze the stochastic oscillator in the Trading System, corresponding to the differences between the% D line and price chart.