Tools of technical analysis
Stock market is a tricky place and if someone has a genuine interest in it to make money then along with the basic knowledge of stock market, one needs to be adaptable with various tools too. If you are interested in stock market and want to play it like a pro then here are some must use tools that will increase your chances at making a more accurate estimate of the future values of the shares:-
The most simple and easy to use tool to understand the trend in the stock market is the Microsoft Excel. You can simply copy the market price of the particular shares of a month and check the trend if the price is expected to rise or fall in the future. The trend of the average prices gives a clear understanding of the prices and their most likely behavior in the future.
There are line charts, candle stick charts and various other charts to understand the technical analysis of the stock market. Every chart displays some value and some trend and those trends help us in predicting whether the market is going downtrend or uptrend. The information of any stock can be plotted in a chart to study the average change in the price of the shares to get a better idea about the future value of that particular stock.
MACD (Moving average convergence and divergence)
This is a very simple and the most effective tool. You just need to plot MACD points in the graph and check where the two lines are meeting. There are 2 lines, one is a fast line and other is the slow line. So, when the fast line crosses the slow line, it’s a buying signal and if the slow line crosses the fast line then it is a selling signal.
RSI (Relative strength index)
RSI works on the basic principles of magnitude of recent gains and losses to see if the assets are oversold or overbought. To make the study easy, they plots the RSI on the scale of 0-100, where if it is above 70 then it is overbought and if it is below 30 then it is oversold. By understanding this you can estimate the appropriate time to invest or disinvest in the market.
There are various online portals where you can simply stay updated every minute and follow the trend. These online portals not only provide you with the live updates but they also provide expert opinions and tech support on whether a particular share is going to rise or fall. This is a simple model of binary option where you place your bets on the stocks, whether they will gain or lose value in the next minute. Technical analysis is the base for binary option and various other portals. Google Finance Charts also serves the purpose as they keep us updated with the trend every minute and provide better indication of uptrend and downtrend.
Support and resistance
You must have got an idea about from the names that one thing is positive and other may be negative. The support and resistance are placed on the higher and the lower caps. In case the actual price crosses any of the caps then it will indicate either an upward or a downward. In case there is an upward trend then wait until it gets constant then sell your shares and if it is falling down then wait when it crosses the cap and then chip and invest in the shares.