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Tools which help Identify Trend in Market

Posted By On 9/21/2009 12:36:00 PM Under ,

We have tried to analyse the tools which will help people to make money from the market and 2 tools which helps one to make money from the market are
Relative strength index (RSI) and moving average convergence divergence (MACD) as these help one to get to know the prevalent trend in the market.

Relative strength index (RSI) helps one to understand the overbought and oversold conditions in a security or a market and it has value ranging from 0-100. The value of 100 is the highest overbought condition and zero is the highest oversold condition. RSI value above 70 indicates an overbought condition and a value below 30 indicates an oversold condition.

The RSI helps to measure the strength of a security's recent up moves, compared to the strength of its recent down moves. This helps to indicate whether a security has seen more buying or selling pressure over the trading period.

The moving average convergence divergence (MACD) signal both the trend and momentum behind a security. The indicator is comprised of two exponential moving averages (EMA), covering two different time periods, which help one to measure momentum in the security or an index. The idea behind this momentum indicator is to measure short-term momentum compared to long-term momentum to help determine the future direction of the asset. The MACD is simply the difference between these two moving averages, which (in practice) are generally a 12-period and 26-period EMA.

There are other indicators also Aroon Indicator, Average Directional Index, Accumulation/Distribution Line, On-Balance Volume and On-Balance Volume which we will discuss subsequently and thus definitely get free email updates to not to miss the updates which can make you a successful trader in market who will be most sought after by general public.

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