Indicators serve three broad functions: * warning * * confirm the predictions of light may act as a warning to learn the price movement of a little more closely. If the pulse (driving force) decreases, it may be a signal that can be expected to break the support line. Or, if formed more positive divergence (divergence), it can serve as a warning to watch for a sharp break resistance line. Indicators can be used to confirm other technical analysis tools. If there is a sharp change in prices on the price chart, corresponding to the intersection of the sliding average value could serve as a confirmation of this breakthrough. Or, if the market breaks the support line that corresponds to the graph display Low On-Balance-Volume (OBV), it can serve as confirmation of the weakness of the market.
Some investors and traders use indicators to predict the direction of changes in future prices. Here, Terrence Rohan expresses very clear opinions on the subject. Indicator – there are a number of data points, which are obtained by applying the formula to the price data protection. Price data includes any combination open (open), the highest value (high), the lowest value (low) or closing (close) over time. Some indicators can only use closing prices in tovremya others include in their formula for the volume and open interest. We introduce the price data in a formula and perform calculations. For example, the average number of 3 final price – provides a single data point ((41 + 43 + 43) / 3 = 42.33). However, one data point does not provide much information and does not show that makes light. For analysis requires a number of data points over time.
Creating a time series of data points, the comparison can be made between present and past levels. For purposes of analysis, indicators are usually shown in graphically above or below the price chart (chart). Shown in graphic form, the indicator mozhator can be compared with the corresponding price schedule. Sometimes the indicators are above the price chart for more accurate comparison. Earn 1% to 50% per month! Indicator offers a different perspective to analyze price movement. Some, such as moving averages, are derived from simple formulas and mechanics relatively simple to understand. Others, such as stochastics (Stochastics), have complex formulas and require more time to study, to fully understand and appreciate. Regardless of the complexity of the formulas, indicators can provide unique perspective in determining the strength and direction of price change. Simple Moving Average (Simple moving average) – an indicator that calculates the average price for a specified number of periods. If the fluctuations in price extremely volatile, then moving average helps to smooth the data. Moving averages filters out random noise and offers a smoother future price movement. Schedule of Veritas (VRTS) displays greater volatility, and analyst may have difficulty in determining the trend. Applying the 1 0-day simple moving average to the price schedule, random fluctuations are smoothed out to make it easier to identify the trend.