Technical Indicators for Online Stock Trading

The use of technical indicators can drastically improve you winning percentage in online trading. Most of the charting packages out there have an extensive library of indicators. Best of all, you can get this stock trading software free from your online broker. Having the right tools is a key while trading the stock market, and technical indicators will help you develop a stock market trading system.

There are several different types of indicators to choose from. Moving averages are one of the more common ones. It simply is an average of past prices over a specific timeframe. You can find advice online through day trading blogs to find out what other traders are using. The moving averages will help you identify the most recent trend and will also provide support and resistance. Support and resistance are important areas to watch when trading stocks.

Stochastics is another technical indicator that is very popular for online trading. This indicator is basically a momentum oscillator that gives you oversold and overbought conditions. It can help you determine when to buy a stock and when to sell a stock. When used in combination with other indicators it makes it even more powerful.

A third technical indicator is the MACD or moving average convergence divergence. This consists of two exponential moving averages. You can use these two ways with trading stock online. The first is the crossover method. When the MACD is below the zero line, it is considered oversold. When the fast moving average crosses above the slow moving average while below the zero line, it's considered a buy signal. The opposite would be a sell signal, where the fast crosses below the slow moving average. The second method is to look for divergence between the price action and the MACD. This sometimes signals a reversal in trend. Of course you will need to use other confirmations within your stock trading system, but this is just a another component you can use.

Volume is a key indicator that you can add to your charts. Watching volume can help with determining if a move in stock price is valid or just a spike. Volume can help you determine position size, or how many shares to buy or sell. If you have too big of a position on light volume, you could have trouble liquidating your position.

There are many other technical indicators available from just about any of the stock trading software in the market today. These are just a few of the more popular ones. Trading online stocks can be very rewarding provided you have the right tools. The proper tools and trading strategy separates the best online stock trader from everyone else. Study these indicators further. If you really want to learn how to trade stocks, then knowing the tools that are available to you and how they work is essential. As with anything, the more you study and the harder you work; the more successful you will be in stock trading.

TradeStocksAmerica Staff

Return to Menu
Here are other articles
you may like:
Best Trading Platform
Buying Stocks Online
How the Stock Market Works
How to Buy Stocks
How to Open a Trading Account
How to Use Support and Resistance When Trading Stocks Online
Keeping Emotions in Check While Online Stock Trading
Learning How to Day Trade
Moving Averages
Stock Trading Systems
Stock Trading Tips
Technical Analysis
Technical Indicators for Online Stock Trading
Three styles of Stock Trading
TR lesson 3-30-12
Trade Management for Online Stock Trading
Stock Charts: Using Technical Indicators