In trading there are charts, methods, lines or technical indicators that are used daily by millions of speculators or investors in the stock market. All of them help to foresee what the market movements will be in order to calculate your investments. The objective? Hit and succeed, counting on capital gains. Guessing the trend would be another reason why these indicators should be used. Among all the stock market indicators that exist in a listed security for monitoring share prices, we highlight three of the most important. RSI, MACD and Stochastic. These indicators are available to traders on investment platforms that allow you to study quotes, companies, stocks, charts or trends. What details should you take into account of these three indicators? Next, we explain them to you:
Stock trading: three indicators of stock investments
Although there are a large number of indicators based on different aspects of analysis, the most important and practically basic are the following: RSI, MACD and Stochastic.
RSI day trading indicator
In English, its acronym is Relative Strength Index which manages to collect the changes in values between 0 and 100. The inventor of this indicator was Mr. J. Welles Wilder, his best result being the use of 14 periods, although with the passage of time its application has become general in 25 or 9 periods. In a common way it is understood that when the line is below 30, there is a good opportunity to buy: at this moment the oversold arrives and, on the contrary, when the line is above 70 it is time to sell: overbought, that is, there is a high risk of selling securities with the consequent fall in the market.
MACD indicator in stock market investments
Known as the indicator of “moving averages of convergence / divergence” and being in English the “Moving Average Convergence Divergene”, it can be said that it looks for the market sentiment, being a technical oscillator that comes to provide us with a sensitive average regarding the intensity of market, warning of changes in the tendency of different assets, in addition to locating the levels of oversold or overbought of the actions. It is made up of two lines and an oscillating histogram above level 0, although depending on various changes due to market fluctuations it can be above or below 0; when the lines are crossed, in the latter case, it is understood that the situation is ideal to proceed to make a purchase on the market.
STO the Stochastic
The indicator contains a variable statistic that comes to mark the current position of the listing of a company on the highs and lows of the company in a given period (but temporary). It is made up of two lines that intersect with ranges of 0 and 100, and it is common for there to be fluctuations between values of 20 and 80. If there is a crossing of lines and it occurs near level 20, it is estimated as the moment of purchase and, if it is is close to said crossing 80, it will indicate a situation of risk and time of sale. These indicators, always supported by a technical analysis of charts, are excellent support for our investments in the stock market or to draw different strategies investment in assets. However, the decisions of our investments in the markets are recommended to be contrasted with other indicators, averages, oscillators, levels of support or resistance, etc.