Understanding Stock Trading Technical Analysis Tutorial

In this video, Rebecca from Zecco Zirens talks about Technical Analysis. Everybody talks about Technical Analysis, but very few people actually understand it. The guys from Wall Street are just trying to scare you, but it is quite simple and logical. Technical Analysis simply ignores the fundamentals like earnings and focuses on the short-term supplying demand for a given stock. Is it under valuated? No one cares. Is it overvalued? Not if everyone wants a part of it.

We are going to look at three technical indicators called MACD, volume and stochastic. These indicators may help you decide whether or not to make a short-term trade. People are usually saying that the trend is your friend. MACD is nothing more than the use of two moving averages to identify a trend. One is an average over a longer period than the other. If one of the moving averages crosses the other this means a change of the stock price. For example, you have a stock on a down trend. Here is how can you know when a stock hits the bottom. You will see the shorter average crossover and move above the longer average.

Volume is the second thing you want to look at. It goes by this principles: stocks going down in relatively heavy volume are not good buys, stocks going up in heavy volume are good buys. Stocks going up in weak volume may be false indicators. The stochastic indicator is just a fancy way of saying whether a stock is over bought or it is over sold. It only works if the stock is in a range so it is a great tool to use to evaluate a bottom. If the stochastics are in over sold range that is a solid short-term indicator for a buy. That is it. Now you are equipped with three widely used technically indicators.

Submitted by YouTube Trader on Thu, 04/08/2010 - 11:01

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