People who want to learn stock market investing techniques are best served by getting as much knowledge of the available technical analysis tools. As a stand-aloneinvestment strategy, technical analysis will never be sufficient. However, it can provided enough statistical data to allow the investor to determine whether to enter or exit a position.
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. Considered one of the most reliable technical indicators, this type of formation gives investors an extremely reliable indication as to where the stock is headed -- up or down -- over a specified period -- short, medium, and long-term. A head-and-shoulders formation has three sharp points. In a bottom formation, there are three low points with the second point (the head) being lower than the first and third points. This pattern gives a strong and reliable indication to buy the stock. As well, it is easy to spot, particularly for investors who are just starting to learn stock market investing techniques. In terms of volume, the first point (the left shoulder) will come with higher volume than the last point (the right shoulder).
Gaps. Perhaps the easiest technical indicator to identify, a gap happens when a stock's low for one day is higher than the high of the previous. People who are starting to learn stock market investing techniques will be automatically drawn to these patterns, although trading on such gaps can pose substantial risk, particularly when beginning to learn stock market investing techniques. It should be noted that gaps usually provide resistance or support levels, so when a stock trend crosses through a previously formed gap, it signal a strong price movement to come.
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).
Investors who are eager to learn more about stock market investing techniques can find plenty of instruction on-line. For those who prefer a more hands-off approach, there is an equally abundant amount of trading software that will complete all of the analysis. Most software measures the same statistical data that full-time technical analysts measure and is therefore a worthy investment.
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. Considered one of the most reliable technical indicators, this type of formation gives investors an extremely reliable indication as to where the stock is headed -- up or down -- over a specified period -- short, medium, and long-term. A head-and-shoulders formation has three sharp points. In a bottom formation, there are three low points with the second point (the head) being lower than the first and third points. This pattern gives a strong and reliable indication to buy the stock. As well, it is easy to spot, particularly for investors who are just starting to learn stock market investing techniques. In terms of volume, the first point (the left shoulder) will come with higher volume than the last point (the right shoulder).
Gaps. Perhaps the easiest technical indicator to identify, a gap happens when a stock's low for one day is higher than the high of the previous. People who are starting to learn stock market investing techniques will be automatically drawn to these patterns, although trading on such gaps can pose substantial risk, particularly when beginning to learn stock market investing techniques. It should be noted that gaps usually provide resistance or support levels, so when a stock trend crosses through a previously formed gap, it signal a strong price movement to come.
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).
Investors who are eager to learn more about stock market investing techniques can find plenty of instruction on-line. For those who prefer a more hands-off approach, there is an equally abundant amount of trading software that will complete all of the analysis. Most software measures the same statistical data that full-time technical analysts measure and is therefore a worthy investment.
