This post will describe which Technical Indicators I use. There are 5 different sets of indicators. The first, Moving Averages, is the most widely used in the Technical Analysis Industry. If there is only one thing to know about picking stocks, it is simple moving averages (SMA). The SMA averages the close of a set amount of previous days (30-SMA would be 30 previous days). I use 4 moving averages, a 4 day, 10 day, 30 day and 50 day. On the chart, these are the white, yellow, blue and red lines respectively.
The second indicator is volume. I use this as one of my secondary indicators to decide whether there is high enough volume to buy or low enough volume to sell short.
Third indicator is stochastics. This is a fancy word for a momentum indicator. It is a scale from 0-100 that measures the buyers and sellers that are in the stock. If the indicator is over the green line (80) it is overbought, and if it is under the red line (20) it is oversold. As you can see, when it gets to one of those points it almost always reverses within a couple days.
The fourth Indicator is the MACD Histogram. Quite simply, when it is increasing (even if the value is negative), it's a buy signal. Getting into the details, what the histogram represents is the MACD indicator less the MACD signal line. The MACD signal line is a 9 day exponential moving average (EMA), while the MACD is the 12 day EMA less the 26 day EMA.
The final indicator is the blue tube around the stock, called the bollinger band. If the stock price touches either the top or the bottom, this is a signal that the stock will reverse very soon.
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