Use of Technical Analysis in Stock Market Trading

Stock Market Trading seems lucrative to many traders. The key to achieve success in stock market trading is to follow some strategy and trade accordingly. The trader can learn technical analysis which is an important tool to study and forecast price movements during trading sessions. In technical analysis the graphs or the charts of the price movements versus time are plotted. The time scale of the charts is user dependent. The time scale can be minutes, hours, days, week or year. The time scale selection is based on the period of trading like intraday or short term trading and the type of trader. Also the charts are of various types like line charts or candle stick charts. The type of chart also depends on the type of analysis the analyst want to do.

Technical analysis is a whole in-depth field having number of indicators. Come of the common indicators are moving averages, exponential moving averages, MACD and RSI. There are many other indicators also which can be used depending upon the expertise of the technical analysts. These indicators are used to generate the buy and the sell signals and to determine the trend of the market. The indicators like moving averages are drawn with different periods. In general the strategy used is to draw moving averages of two different periods and to initiate the trade at the cross over of the two moving averages. The crossover of the moving averages generally indicates the trend reversal and the appropriate position must be taken at this event. In case of exponential moving averages the moving average is calculated by applying appropriate weights to the price levels.

Technical analysis is a very wide field and it takes a lot of time and effort to gain mastery over this area. So if a beginner is not able to perform the technical analysis himself he can take the help of some advisory firm which provide Stock Market Tips for trading.