Indices Technical Analysis is Based on 3 Factors Common in the Indices Trading Market:
1. Stock Indices Price Moves in Trends
Trading stock indices trading price movements follow trends. This means that after a indices trend has been established, the future stock indices trading price movement is more likely to be in same direction as the indices trend than to be against it. Most indices trading strategies are based on this stock indices technical analysis concept -indices trend trading.
2. Indices Price Movement Discounts Everything
Stock indices technical analysis only considers stock indices trading price movement and assumes that, at any given time, stock indices trading price reflects everything that has or could affect the indices instrument including even the fundamental factors. This only leaves the study of stock indices trading price, which is a product of the supply and demand for indices in the stock indices trading market.
3. History Tends to Repeat Itself
History repeats itself mainly in terms of stock indices trading price movement. Repetitive nature of stock indices market movements is attributed to indices traders investor psychology; in other words, indices trading participants tend to provide a consistent reaction to the stock indices trading market most of the time. Stock indices technical analysis uses indices chart patterns to analyze these stock indices trading price movements. Although these indices charts represent historical data they are still relevant because they illustrate stock indices chart patterns that often repeat themselves.
Understanding this stock indices technical analysis of the stock indices trading market can be a valuable indices trading tool in determining the indices trend of any stock indices market and assisting with entry and exit levels for your stock indices trades.
The goal of these stock indices technical analysis methods is to help indices traders determine when the stock indices trading market is trending, and when it isn't. If the indices trading price is moving in one particular direction, then we want to be on board. If the indices instrument is not moving in a particular direction, all you are going to do is lose money as you will get whipsawed around and this is not what we want as indices trading investors.
Unfortunately, many traders fight the indices trend and buy or sell in the opposite direction of a this indices trend direction, trying to pick a top or a stock indices market bottom, only to see the stock indices trading market move further in direction of the trend.
Another common mistake indices traders often make is adding on to a losing indices trading position, averaging a loss. This is not a good indices trading strategy especially in a strongly trending stock index market. It is something that experienced investors never do. The indices trend is your friend, never go against it.
This stock indices technical analysis studies alert investors of indices trading setups and there are no certainties in financial stock index market. Profits come from using proven indices strategies & indices trading methods to find a trending indices market and taking stock indices trades in the same direction of the market trend.
With so many indices trading investors using similar indices trading tools, stock indices technical analysis can become a self fulfilling prophecy. If many indices trading investors use the same levels as a buying point, the stock indices trading price goes up as everyone will make similar stock indices technical analysis moves. However, the question is always how long these indices trading moves will last?
Understanding this stock indices technical analysis methods will give the indices charts some meaning when you look at them and apply stock indices technical analysis. Stock indices technical analysis will help you understand why certain stock indices trading price movements occurred.
Stock indices charts are used with indices technical indicators to look for stock indices chart patterns that have occurred in past under certain conditions. When these conditions are noted again, you can use the past stock indices chart patterns studies to make a buy or sell decision.
Some of the most common indices technical indicators include: Indices Technical Analysis Explained PDF
- Moving Averages Indicator
- Relative Strength Indicator
- Stochastic Oscillator Indicator
- MACD Technical Indicator
- Fibonacci Retracement Indicator
- Bollinger Bands Indicator
Most indices technical indicators are shown separately from the stock indices chart usually below it. This is because these indicators often use a different scale than that of the stock indices trading price chart.
Some of the technical indicators are shown on the stock indices trading price chart itself, such as Moving Averages and Bollinger bands - these indicators are referred to as stock indices trading price overlays.
Explanation of these indicators is found under the tutorial: List of All Indices Indicators - Indices Technical Analysis Tutorial - Learn Indices Technical Analysis Tutorial
SUMMARY
- Indices Technical Analysis Relies on Defining Probabilities
- Indices Technical Analysis Uses History of Indices Price Patterns
- Indices Technical Analysis Uses Several Analytical Tools (Indices Indicators)
- Indices Technical Analysis Uses Stock Indices Chart Patterns
Learn Indices Technical Analysis Tutorial
Most indices traders prefer technical analysis - learning the stock indices technical analysis methods also takes time to learn due to its nature which involves abiding by the stock indices trading technical rules.
To learn how to trade indices trading successfully, it's important that you understand the Three strategies, outlined below:
1. Indices price moves will always follow a indices trend which can be identified by looking at the stock indices chart patterns or the candlesticks stock indices charts. If any indices trading investor tells you that you can also profit from the counter-trends consistently it will not be possible because the indices trend is the only proven method of making money in the stock indices trading market.
2. The market forces will drive the stock indices trading prices up or down depending on supply and demand. Stock indices technical analysis seeks to measure the demand supply of a indices instrument using various stock indices technical analysis tools & stock indices indicators. The demand supply is reflected in the stock indices trading price action. Therefore, by simply looking at the stock indices trading price movements themselves you can try and predict what direction the stock indices trading price is likely to move towards using one or two indices technical indicators - stock indices technical analysis indicators like the moving average or support and resistance levels stock indices indicators.
3. The stock indices market not only shows the history of the past stock indices trading prices, but will also follow the indices trend that was in place, until its indices trend direction reverses. Some very important indices indicators used to determine these stock indices market movements are Moving Averages, MACD and Bollinger Bands Indices Indicators.
When stock indices trading price starts to consolidate, which means there is no indices trend, you should use a different approach to analyze the stock indices trading market. You should use support and resistance levels and breakout indices trading strategies to analyze the ranging stock indices market indices prices.
When the stock indices trading market retraces, you should use stock indices patterns & indices technical indicators to analyze whether the current indices trend will continue or reverse.
