I am so passionate about my methods that I want to scream about them. But, I must remember that they are not for everyone. And you may not even be interested at all. Of course, that’s fine. Technical investing is not the only way to go. There is also fundamental investing.
Let me skip over the fundamentalists for now. If you are a technical investor or want to be, then you may want to pay attention from here on in.
The first thing that I’m going to talk about is something that is already known by many as the most basic technical indicator out there, the moving average.
That’s right, the consensus is that the most basic of all the technical indicators is the simple moving average. It is basically the stock price, smoothed out over a period of time. Even if you have other indicators open at the same time (recommended), you still would be smart to check out a moving average for your stock investment strategy.
Recognizing Extreme Conditions
Another very useful indicator that you may want to use with your stock investment strategy is Bollinger Bands.
I love these little guys. I can tell so much more about a stock now than I could before I started using them. They are so useful for giving me the go ahead or the no go before I dive in.
Similar to Bollinger Bands is the Keltner Channel. For simplicity sake, let’s just say that they measure just about the same thing. And they pretty much do. But, the equation that makes each one differs slightly, thus making each one useful in a different way.
So, which one is the best? My opinion, use them both.
Recognizing Oversold And Overbought Conditions
Alright, by now I have gone over a few of the overlays that you may want to use for your stock investment strategy.
Let’s talk about one now that just happens to be one of the indicators that uses the ever popular moving average crossover (that I discussed first)… the RSI.
This happens to be one of my favorite oscillators. I have it open at all times when doing stock research. And it gives me valuable insight into the overbought and oversold conditions of a stock. It’s great for that purpose. But, it doesn’t hold a monopoly. There is another popular indicator, which works slightly differently but gives just about the same signs, the ROC indicator.
Whats The Greatest Thing About Macdonalds? I love the mochas. In fact I’m drinking one right now. But mochas aren’t going to make you rich, are they? What may make you rich is the first four letters, MACD. I know, I know, that’s not how you spell McDonalds. But funny, huh?
The MACD is a simple yet effective oscillator that I use myself. It is so simple and so useful that it has become popular among many technical investors.
It is another of the oscillators that uses the moving average. Speaking of moving average and oscillators, just about every oscillator uses a moving average.
Start With The Simple
These oscillators that I have discussed are my part of the technical indicators that I use for my trading. However, feel to pick and choose, and move on to more advanced techniques as you become comfortable with the basics.