Since trading has been introduced online, the majority of brokers and banks have created and successfully established online trading apps to make trading more amenable to traders all over the world. Since the introduction of apps, more Demat accounts have opened in India, and everywhere else, and in traders and investors, you can find budding novices and experienced analysts. If you are trading with an online trading app, you probably have one on your smartphone. As advantageous as this may be, you will find that trading itself can be quite challenging and you need a fair bit of acumen to trade to make profit. Therefore, many traders, whether experienced or not, make use of certain indicators to help them to make trades gainful.
Technical Indicators
An online trading app helps you to trade conveniently. However, how do you ensure, at least to a large extent, that your trades may see some returns? You may use the best share trading app, but you should be aware of specific technical indicators that help your trades to be profitable. These may not give you a full guarantee of returns, but they go a long way to improving your chances while trading. Used as tools by traders, technical indicators can give you insights into the demand and supply of stocks and the psychology behind the present market moves. You may not use all the technical trading indicators together, but you will definitely have a clue as to when to use what while engrossed in your trading activity.
5 Trading Indicators to Use
When you open a Demat account for the very first time, you may be enthusiastic to trade quickly, with a view to making gains. While stock trading apps five you the convenience of great functionality, they may not tell you what to look for while making trades. Hence, you must rely on certain trading indicators, and these five have been tried and tested to work most of the time:
1. Volume Indicators - The OBV or ‘On Balance Volume’ is a technical indicator that measures the positive and negative volume flow in a security over a period. This indicator works on the simple principle of the running total of ‘down’ volume that is subtracted from the ‘up’ volume. The up volume indicates the volume on the day that stocks rallied and the down volume represents the volume on the day the stocks’ prices fell. For every day, the volume gets added or subtracted. Thus, such an indicator shows that when the OBV is surging, purchasers may take the stock higher, and vice versa.
2. Aroon Indicators - When you use an online trading app, you can quickly use indicators to view whether you should make trades or not. This indicator tells you whether a stock is on a trend of rising or falling. With an Aroon Oscillator, you can calculate the rise of a stock, going above what is called an ‘Aroon Line’ or the dropping trend of a stock below the line.
3. The RSI (Relative Strength Index) - This is the one of the most common technical trading indicators used by a plethora of traders. The index is arrived at by a position that is reached, between 0 and 100, and recent gains in price are plotted versus recent losses. Consequently, the levels of the RSI help investors to gauge the trend and momentum of a stock’s strength.
4. The Stochastic Oscillator - This indicator gives you some clues of a stock’s current price compared to the stock’s price at different periods in the past. The main idea behind this is that when the trend of a stock is climbing, the price reaches highs not experienced before, and vice versa.
5. The ADX - The ADX, or the Average Directional Index is another indicator that shows the trend of any given stock. While you use stock trading apps, the ADX measures the momentum and holding capacity of any stock trend. If the strength of the direction is upwards, then the price is implied to rise more, and so on.
Analyse Before You Trade
It is common knowledge that trading experts analyse and then make trades based on a few technical indicators. This takes time and most of us want quick day trading with quicker profits. However, after you open a Demat account, you may diversify your stock portfolio by going into some day trades using technical analysis, and some long-term securities that are bound to offer you high returns.
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