STOCK MARKET AT YOUR DESKTOP
LEARN TECHNICAL ANALYSIS:
1. MOVING AVERAGES :
A buy signal is generally assumed if the short term moving average crosses over the long term moving average. Similarly a sell signal can be indicated when the short moving average falls down the long term moving average.
Short term trends are identified by short period MAs – like the 9 day and 15 day Mas. A medium term trend is given by the 30 – 50 day moving averages.
Moving Averages are particularly useful in identifying the direction of an uptrend or downtrend of stocks and markets. They are based on the previous data and hence are generally referred to as lagging indicators which help us in locating the trend and following on in the trend. Since they do not allow you to predict the trend, you have to use other technical indicators in conjunction with them during trading.
The best method to trade with the Moving averages is – If the price crosses above the moving average, it means that a buying interest has set in – and thus indicates a buy signal. Similarly when the price crosses down the moving average, it means that a selling pressure has set in – thus indicates a sell signal.
Traders should be cautious when using the moving averages for planning trades for a very short time frame. It is also important to consider the volume for the security in question before trading.
