For people looking to learn stock market investing techniques, a great place to start is through gaining an understanding of technical analysis tools. Although technical analysis is never enough determine whether to execute a trade, it can provide statistical data on entry and exit points.
Although there are literally hundreds of different technical analysis measurements, the three discussed here are among the most reliable formation that investors will cross. It makes the most sense to discover them as soon as possible when one starts to learn stock market investing techniques:
Head-and-Shoulders. As one of the most reliable and strongest technical patterns, a head and shoulders formation tells investors where the stock is headed in the short-, medium- or long-term. A head-and-shoulders top, for example, has three distinctive peaks which are formed by successive stock rallies. The second rally (the head) will reach a higher peak than the first, and the third rally will fall short. This type of patter is easy to identify, even for investors who are just starting to learn stock market investing techniques. Volume, however, should also be considered, with the volume being strongest with the first rally than with the third rally.
Gaps. One of the easiest technical formations to spot, people who want to learn stock market investing techniques will automatically become drawn to gaps (up or down). Typically, gaps provide support or resistance to stock trends. Although trading on a gap up or down can become risky for people who are just starting to learn stock market investing, when a regular trend breaks through that previously formed gap, it is quite possibly a sign of a strong price movement.
Bollinger Bands. Used as a tool, Bollinger Bands are not stock price patterns. Instead, they are an oscillator, which tells investors about the probability of a stock trend. For people who want to learn stock market investing techniques, Bollinger Bands are a must. They give a buy or sell signal based on a stock's volatility as it moves two or three standard deviations from its mean. When the stock price closes at or above the upper band, it triggers a sell signal (vice versa for the lower band).
For people who want to learn more about stock market investing techniques, there is a wealth of information available on line, most of it at no cost. However, for more serious investors, stock trading software completes much of the work for you. In fact, many brokerages offer technical analysis resources for free with most accounts. - 31987
Although there are literally hundreds of different technical analysis measurements, the three discussed here are among the most reliable formation that investors will cross. It makes the most sense to discover them as soon as possible when one starts to learn stock market investing techniques:
Head-and-Shoulders. As one of the most reliable and strongest technical patterns, a head and shoulders formation tells investors where the stock is headed in the short-, medium- or long-term. A head-and-shoulders top, for example, has three distinctive peaks which are formed by successive stock rallies. The second rally (the head) will reach a higher peak than the first, and the third rally will fall short. This type of patter is easy to identify, even for investors who are just starting to learn stock market investing techniques. Volume, however, should also be considered, with the volume being strongest with the first rally than with the third rally.
Gaps. One of the easiest technical formations to spot, people who want to learn stock market investing techniques will automatically become drawn to gaps (up or down). Typically, gaps provide support or resistance to stock trends. Although trading on a gap up or down can become risky for people who are just starting to learn stock market investing, when a regular trend breaks through that previously formed gap, it is quite possibly a sign of a strong price movement.
Bollinger Bands. Used as a tool, Bollinger Bands are not stock price patterns. Instead, they are an oscillator, which tells investors about the probability of a stock trend. For people who want to learn stock market investing techniques, Bollinger Bands are a must. They give a buy or sell signal based on a stock's volatility as it moves two or three standard deviations from its mean. When the stock price closes at or above the upper band, it triggers a sell signal (vice versa for the lower band).
For people who want to learn more about stock market investing techniques, there is a wealth of information available on line, most of it at no cost. However, for more serious investors, stock trading software completes much of the work for you. In fact, many brokerages offer technical analysis resources for free with most accounts. - 31987
About the Author:
Christopher Fitch has nearly 20 years of Investment Management experience. He is the founder of the Mutual Fund Site.org.
