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.
Another tool that one can add to his arsenal would be the 200 EMA which is a trend indicator. Basically, the EMA 200 will tell a trader if the trend is going in an uptrend or is in a downtrend. When the 200 EMA points upward, it is an uptrend but if it goes down, then it is a downtrend.
Another way to use the 200 EMA is to look where the chart is. If the candlesticks are above the 200 EMA, then generally one will only look for buy trades. However, if the candlesticks are below the 200 EMA, then the traders will usually look only for sell trades.
One may also make use of the MACD in order to know when to enter and to exist. The basic structure of the MACD is a histogram in the middle and two moving averages. In a nutshell, if these moving averages cross going from up to down, then it is an indication of a sell but if the moving averages cross going from down to up, then it is an indication of a buy.
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.
Another tool that one can add to his arsenal would be the 200 EMA which is a trend indicator. Basically, the EMA 200 will tell a trader if the trend is going in an uptrend or is in a downtrend. When the 200 EMA points upward, it is an uptrend but if it goes down, then it is a downtrend.
Another way to use the 200 EMA is to look where the chart is. If the candlesticks are above the 200 EMA, then generally one will only look for buy trades. However, if the candlesticks are below the 200 EMA, then the traders will usually look only for sell trades.
One may also make use of the MACD in order to know when to enter and to exist. The basic structure of the MACD is a histogram in the middle and two moving averages. In a nutshell, if these moving averages cross going from up to down, then it is an indication of a sell but if the moving averages cross going from down to up, then it is an indication of a buy.
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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