| Technical analysis reveals the perceptions of the | | | | whether the stock is overbought or oversold. |
| market toward each business and its stocks. With | | | | There are many other indicators, but these are just a |
| the right tools, we as traders can gain insights into | | | | few you should look for and learn to use when |
| the patterns that present themselves. When I say | | | | buying and using your charting system. Other things |
| tools, though, I really mean "tool". That tool is | | | | to look for in a good charting system are the ability |
| charting software that leverages your insight, | | | | to define and plot moving averages, drawing tools |
| leveraging your profitability. | | | | for identifying support and resistance, pivot points, |
| The foundation of all stock technical analysis is the | | | | Bollinger bands, and Fibonacci ratios. |
| chart. When Charles Dow invented technical analysis, | | | | How else can you analyze stocks to leverage our |
| he produced charts by hand, but today you'll find all | | | | stock profits? Well, beyond this stock trading tutorial, |
| kinds of digital options. There are some great | | | | it's important to learn how to identify trends, price |
| software packages available for download, or you | | | | movements, and to recognize patterns, such as Head |
| can access a number of free or subscription-based | | | | and Shoulders, Double Tops or Double Bottoms, |
| web charting systems. When putting together your | | | | Flags, Triangles, and more. |
| trading toolset, this is one area you don't want to | | | | Analyzing stocks can take us a long way, but we |
| skimp on. Some charts just don't cut it in terms of | | | | want to minimize our losses and maximize our profits, |
| thorough technical analysis. Find the chart that does | | | | so its importance to recognize the limits of technical |
| what you need it to do. | | | | analysis. The big two limitations of technical analysis |
| When looking for a good charting system, be sure to | | | | I'd like to talk about are business operations and |
| check if it has all the basic indicators. Here are five | | | | unpredictable news. |
| recommended tools I've included in this stock trading | | | | While stock technical analysis does reflect past |
| tutorial: | | | | business performance through the stock's price, it |
| 1) MACD (Pronounced "Mac-D")- Moving Average | | | | doesn't identify the intrinsic value of each new |
| Convergence/Divergence, it helps to indicate trends | | | | employee or business endeavor. Technical analysis |
| by showing broad moving averages compared to | | | | won't be able to handle that information until news |
| moving averages of a shorter time period. | | | | results come out and the public is aware of what's |
| 2) CCI- the Commodity Channel Index is used to | | | | happening. This is similar to whatever news comes |
| identify strong trends and reversals. | | | | out that couldn't have been predicted, such as an |
| 3) Stochastic Oscillator- This indicator can help us | | | | executive's personal indiscretions. Just be aware that |
| traders find turning points in prices by comparing | | | | whenever news is coming out or does come out, it |
| closing prices to the price range over a certain period | | | | can affect the stock price in ways unanticipated by |
| of time. | | | | technical analysis. |
| 4) On-Balance Volume- Using volume, this indicator is | | | | I hope this stock trading tutorial has been useful for |
| meant to show when price should be moving up or | | | | you. Be sure to continue to educate yourself on |
| down. | | | | technical analysis (see below) and how to use it to |
| 5) RSI- The Relative Strength Index uses gains and | | | | leverage yourself to higher profits. |
| losses to try to predict momentum based on | | | | |