The technical Analysis: How to use Technical Indicators - a part 1

The author: Mostafa Soleimanzadeh

There is a set of technical indicators how to choose good indicators of a stock?

Technical indicators are used, that the nobility when to enter or leave trade. If you know how to enter and leave trade, you can easily receive profit. For this reason the choice good indicators of a stock is important.

Some of indicators of the share market are more extended and useful than others. Also you require several of them to trade not all from them.

In this article I try to describe three generators:

Impulse and Norm of Change (BIRD RUH)
Convergence/divergence of Sliding average value (MACD)
Relative Index of Force (RSI)

What generators?
Generators - indicators which are usually calculated from the prices, and it tends to go by a bicycle or to "fluctuate" within the motionless or limited range.

Impulse and Norm of Change (BIRD RUH)

Impulse - the generator developed to measure norm of change of the prices, not actual price level. This generator consists of pure distinction between the current price at the moment of closing of a stock exchange and the oldest price at the moment of closing of a stock exchange since the predetermined period.

The formula:

Impulse (M) = CCP - OCP

Where: CCP - the Current Price at the moment of stock exchange closing, and OCP - the Old Price at the moment of stock exchange closing

Impulse - distinction, and BIRD RUH - the relation expressed in percent is simple. The impulse and Norm of Change (BIRD RUH) are simple indicators, showing distinction between the today's price and end N several days ago. The impulse in the general term means insistently movement of the prices in the given management.

Convergence/divergence of Sliding average value (MACD)

MACD it is calculated, subtracting longer sliding average value from shorter sliding average value. MACD it is used with a signal or accurater line which is sliding average value MACD. If MACD and accurater cross of a line it specifies, that change in the tendency is probable. MACD developed Dzheraldom Appel.

MACD smoothes data so does sliding average value; but it also deletes a tendency part, putting in the forefront cycles and sometimes moving in coincidence to the market.

Relative Index of Force (RSI)

RSI measures relative changes between upward-steps or downwards-moves and measures its production to a motionless range, from 0 to 100. RSI - the generator, and Welles More wild developed it.

The formula to calculate RSI:

RSI = 100 - [100 / (1+RS)]

Where: RTS is average of days N, is closed, divided into an average of days N downwards is closed, and N - the predetermined number of days is usually chosen 14.

RSI can use as the indicator overbought/oversold. The purchase signal - when RSI moves below a threshold, in the resold territory, and then is crossed back above that threshold, usually 30 is taken for the resold threshold. The progiving is informed, when RSI moves above other threshold, in bought superfluous territory, and then is crossed below that threshold, usually 70 is taken for bought superfluous a threshold.

The conclusion

Generators are used as the indicator overbought/oversold. Purchase is informed, when the generator moves below some threshold, and then is crossed back above that threshold. The progiving is informed, when the generator moves above other threshold, and then is crossed below that threshold.

Generators have a potential to provide a good input and target points. Thus they have a potential to provide high percent from trade wining. Also they have some weaknesses; some of them can to become easily persistently continued one of their extreme measures, or not to grasp a few tendencies.

About the Author

Mostafa Soleimanzadeh the owner http://www.stockinvestingideas.com / where you can Study the Investment in the Share market from the Expert.

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