The Best Technical Indicators (Stock Investing)
In this post, I am going to share with you the importance of technical indicators and what are the best ones you could be using to trade or invest. Hi everyone my name is Justin Lev and I create content on anything you can be doing with your phone, computer, and the internet. A map can show you where everything is located, but without a compass, you won’t know what to do and where to go.
When I started investing, all I would do is pick the stocks with significant movement and open a position. This worked for the first few times but then as I continued, my balance sheet was not looking great. I took a step back and asked myself, where am I going wrong and how can I improve. That’s when I decided to open up some books and start learning strategies that have been proven to be profitable over time. All these strategies had one thing in common, technical indicators. These are what guide every successful investor. Today I am going to go over the three most respected technical indicators. The RSI, MACD, and Volume.
The relative strength index (RSI) is a well-known momentum oscillator. It was developed in 1978 by J. Welles Wilder. The RSI provides technical traders signals about bullish and bearish price momentum. An asset is usually considered overbought when the RSI is above 70% and oversold when it is below 30%. Chart also lets investors plot trend lines to see correlations with other patterns like a divergence pattern. This alone is a great guide for knowing when to enter and exit positions. Now let’s break down the MACD.
MACD (Moving Average Convergence Divergence) is a trend-following momentum indicator. This shows the relationship between two moving averages of a stock’s price. The MACD is calculated by subtracting the 26-period Exponential Moving Average (EMA) from the 12-period EMA. MACD triggers technical signals when two lines cross above to buy or below to sell.
Volume refers to the number of shares that are sold, or traded, over a certain period of time. Generally, stocks with more daily volume are more liquid than those without, since they are more “active”. Volume is an important indicator in technical analysis because it is used to measure the relative significance of a market move. The higher the volume during a price move, the more significant the move, and the lower the volume during a price move, the less significant the move.
You can use all these technical indicators for free on Tradingview. All you have to do is search for the company you are interested in and then click on the full-featured chart. If you have any questions feel free to ask in the comments below. I hope you were able to learn from this. Don’t forget to like and subscribe! See you in the next one. Peace!
