How to Take Maximum Benefit From Stock Market Trading with Technical Analysis

by ProfitAim Research Share Market Advisor

Stock market trading seems lucrative to many traders. The key to achieve success in stock market trading is to follow some strategy and trade accordingly. There is also another option of trading on the basis of Stock Cash Tips and Sure shot intraday Stock Option Tips from expert technical analysts.

The traders can learn technical analysis, which is an important tool to study and forecast price movements, during the trading sessions. In technical analysis the graphs or the charts of the price movements versus time are plotted. The time scale of the charts is user dependent. The time scale of the charts can be minutes, 1-hour, 1-day, 1-week or year. The time scale selection is based on the period of trading like intraday or short term trading and the type of trader. Also, the charts are of different forms like line charts/ candlestick charts. The type of chart also depends on the type of analysis, the analyst wants to do.

Technical indicators Used by Technical Analysts

Technical analysis is a whole in-depth field having a number of indicators. Some of the commonly used indicators are moving averages (MA), exponential moving averages (EMA), MACD and RSI. There are many other indicators, which can be used based upon the expertise of the concerned technical analyst. These indicators are used to generate the buy and the sell signals and to determine the trend of the market. The indicators such as moving averages (MAs) are drawn with various periods.

In general the strategy utilized, is to draw moving averages (MAs) of two different periods and to initiate the trade at the cross over of the 2 moving averages. The crossover of the moving averages (MAs) usually indicates the trend reversal and an appropriate position can be taken at this event. In the case of exponential moving averages (EMAs), the moving average is calculated by applying suitable weights to the price levels.

One can also use the indicators like RSI and MACD together to find the trend reversals. RSI takes a value between 0 and 100. The value of RSI greater than 70 indicates the overbought condition. Similarly, if the value of RSI is below 30, it represents the oversold condition. In the conditions of overbought and oversold value of RSI, there is a high probability of trend reversals. Similar to the RSI, the MACD indicator also indicates the trend reversal conditions. MACD stands for Moving average convergence and divergence. Thus, when both the RSI and MACD indicate the trend reversal, there will be a high probability of the trend reversal. Thus, this strategy, utilizing both the MACD and RSI can be effectively used to anticipate the trend reversal.

Technical analysis is an extremely wide field and it takes a considerable time and effort to gain mastery over this subject. So if a beginner is not able to perform the technical analysis himself, he can take the help of some advisory firm which provide stock market tips for trading. ProfitAim Research is one such best advisory firm, which provide 100 accurate sure shot Stock Cash Tips and Stock Option Tips, based on the advanced technical analysis done.