Day traders are offered with a number of ways to earn money from the stock market. Through obtaining solid principles of day trading, they are able to reach their goals in a productive way. In this light, it is important for day traders to invest in a day trading system that will help them in enhancing as well as perfecting their trading strategies.
Most successful and experienced day traders employ solid principles, which they have adapted from trading experts including Warren Buffet and Peter Lynch among others. These trading experts make use of trading fundamentals in accordance with their trading strategies and methods. They implement their personal trades that aid in achieving their goals as day traders. In addition, trading experts counter issues that come from investing in wrong or unacceptable stocks. Just like any other experts in their fields, trading experts have also started from scratch, learning the fundamentals of trading prior to becoming skilled and accomplished people in the business.
Learning the basic principles in trading can establish entry points, which are suitable for the budget of every trader. More so, it can help in realizing actual loss of money in the stock market. On the other hand, it is recommended that day traders invest in a day trading system, which can offer them an appropriate background setting, practical and useful features, and learning tools. Day traders should choose a system that does not require much time and knowledge to learn. More so, the system should be able to help them make substantial decisions related to stock market trading through exact monitoring of market picks.
Are you looking to make a daily income by learning the secrets of a day trading system to http://www.eminitradingstrategies.com
by Gabriel Knight
Sep 29, 2009
Stock Analysis Software - How to Make The Right Choice!
I'm sure you've seen all the fancy software's online and the tools that are offered by large investing companies, but how do you know which one to use? It has become quite popular among investors that using stock charting software is how most they make trades and stay on top of their game. It provides the assistance in making decisions without having to do all the grunt work. For each stock investment or option all the data, analysis and research is given to you at hand to help speed up the decision making process that needs to be made in a fast timely manner.
Stock charting software's are very helpful being able to offer you information without much research. It is great for all investors at any level from the novice to the expert and beyond. So how can you pick the right software? There are certain things that you should look for before purchasing one.
Stock Analysis Software Tips, the Rundown
* A good way to know what software will give you the best bang for its buck is to look into its past performance. Generally, locating an established software with a solid track record can offer you more reliability with positive results. Besides, remember that if it has been around for a while then apparently it's bringing something good to the table
* Check to see if you are given a free demo to try out. You definitely don't want to jump into buying something that you can't try out regardless of how much hype is put into it. What others might find works great for them, might not work well for you.
* You want to find a program that offers a variety of functions. This will give you the ability to have everything all in one place. This enables you to make quicker and faster decisions on your investment because you're able to access all your tools at once immediately.
Stock charting software can be a great tool to assist you in your investing decisions. It will ultimately cut out the grunt work and ease your work load by giving you information and analysis upfront.
Gain the leverage you need to help assist you in your decision making to dominate your stock market. http://www.the-penny-stock-investment.info
by Dave B
Stock charting software's are very helpful being able to offer you information without much research. It is great for all investors at any level from the novice to the expert and beyond. So how can you pick the right software? There are certain things that you should look for before purchasing one.
Stock Analysis Software Tips, the Rundown
* A good way to know what software will give you the best bang for its buck is to look into its past performance. Generally, locating an established software with a solid track record can offer you more reliability with positive results. Besides, remember that if it has been around for a while then apparently it's bringing something good to the table
* Check to see if you are given a free demo to try out. You definitely don't want to jump into buying something that you can't try out regardless of how much hype is put into it. What others might find works great for them, might not work well for you.
* You want to find a program that offers a variety of functions. This will give you the ability to have everything all in one place. This enables you to make quicker and faster decisions on your investment because you're able to access all your tools at once immediately.
Stock charting software can be a great tool to assist you in your investing decisions. It will ultimately cut out the grunt work and ease your work load by giving you information and analysis upfront.
Gain the leverage you need to help assist you in your decision making to dominate your stock market. http://www.the-penny-stock-investment.info
by Dave B
Sep 7, 2009
Relative Strength Index
The Relative Strength Index (RSI) is a financial technical analysis momentum oscillator measuring the velocity and magnitude of directional price movement by comparing upward and downward close-to-close movements.
Momentum measures the rate of the rise or fall in stock price. Is the momentum increasing in the "up" direction, or is the momentum increasing in the "down" direction.
A simple way to picture momentum: Imagine a ball rolling down a hill. It starts off pretty slow and then as it gets further down the hill it picks up momentum and starts rolling faster.
The RSI was developed by J. Welles Wilder and published in Commodities magazine (now called Futures magazine) in June 1978, and in his New Concepts in Technical Trading Systems the same year.
Note that the term relative strength also refers to the strength of a security in relation to its sector or the overall market. For instance, XYZ might rise 2% when S&P 500 rises 1%. This is sometimes called comparative relative strength to avoid confusion. It's unrelated to the Relative Strength Index described here.
Calculation :
For each day an upward change (U) or downward change (D) is calculated. "Up" days are characterized by the daily close being higher than yesterday's daily close, i.e.:
U = closetoday − closeyesterday
D = 0
Conversely, a down day is characterized by the close being lower than the previous day's (note that D is nonetheless a positive number),
U = 0
D = closeyesterday − closetoday
If today's close is the same as yesterday's, both U and D are zero. An average for U is calculated with an exponential moving average using a given N-days smoothing factor, and likewise for D. The ratio of those averages is the Relative Strength,
RS = { EMA[N] of U / EMA[N] of D }
This is converted to a Relative Strength Index between 0 and 100,
RSI = 100 - 100 x { 1 / 1 + RS }
This can be rewritten as follows to emphasise the way RSI expresses the up as a proportion of the total up and down (averages in each case),
RSI = 100 x { EMA[N]of U / (EMA[N]of U) + (EMA[N]of D) }
The EMA, in theory, uses an infinite amount of past data. It's necessary either to go back far enough, or alternately at the start of data begin with a simple average of N days instead,
AvgU{initial} = { U1 + U2 + ... + UN } / N }
and then continue from there with the usual EMA formula,
AvgU{today} = a x U today + (1-a) x AvgU yesterday
Wilder recommended a smoothing period of 14. This is by his reckoning of EMA smoothing, ie. α=1/14 or N=27.
Wilder posited that when price moves up very rapidly, at some point it is considered overbought. Likewise, when price falls very rapidly, at some point it is considered oversold. In either case, Wilder felt a reaction or reversal is imminent. The slope of the RSI is directly proportional to the velocity of the move. The distance traveled by the RSI is proportional to the magnitude of the move.
As a result, Wilder believed that tops and bottoms are indicated when RSI goes above 70 or drops below 30. Traditionally, RSI readings greater than the 70 level are considered to be in overbought territory, and RSI readings lower than the 30 level are considered to be in oversold territory. In between the 30 and 70 level is considered neutral.
Wilder further believed that divergence between RSI and price action is a very strong indication that a market turning point is imminent. Bearish divergence occurs when price makes a new high but the RSI makes a lower high, thus failing to confirm. Bullish divergence occurs when price makes a new low but RSI makes a higher low.
Wilder thought that "failure swings" above 70 and below 30 on the RSI are strong indications of market reversals. For example, assume the RSI hits 76, pulls back to 72, then rises to 77. If it falls below 72, Wilder would consider this a "failure swing" above 70.
by J. Welles Wilder
Momentum measures the rate of the rise or fall in stock price. Is the momentum increasing in the "up" direction, or is the momentum increasing in the "down" direction.
A simple way to picture momentum: Imagine a ball rolling down a hill. It starts off pretty slow and then as it gets further down the hill it picks up momentum and starts rolling faster.
The RSI was developed by J. Welles Wilder and published in Commodities magazine (now called Futures magazine) in June 1978, and in his New Concepts in Technical Trading Systems the same year.
Note that the term relative strength also refers to the strength of a security in relation to its sector or the overall market. For instance, XYZ might rise 2% when S&P 500 rises 1%. This is sometimes called comparative relative strength to avoid confusion. It's unrelated to the Relative Strength Index described here.
Calculation :
For each day an upward change (U) or downward change (D) is calculated. "Up" days are characterized by the daily close being higher than yesterday's daily close, i.e.:
U = closetoday − closeyesterday
D = 0
Conversely, a down day is characterized by the close being lower than the previous day's (note that D is nonetheless a positive number),
U = 0
D = closeyesterday − closetoday
If today's close is the same as yesterday's, both U and D are zero. An average for U is calculated with an exponential moving average using a given N-days smoothing factor, and likewise for D. The ratio of those averages is the Relative Strength,
RS = { EMA[N] of U / EMA[N] of D }
This is converted to a Relative Strength Index between 0 and 100,
RSI = 100 - 100 x { 1 / 1 + RS }
This can be rewritten as follows to emphasise the way RSI expresses the up as a proportion of the total up and down (averages in each case),
RSI = 100 x { EMA[N]of U / (EMA[N]of U) + (EMA[N]of D) }
The EMA, in theory, uses an infinite amount of past data. It's necessary either to go back far enough, or alternately at the start of data begin with a simple average of N days instead,
AvgU{initial} = { U1 + U2 + ... + UN } / N }
and then continue from there with the usual EMA formula,
AvgU{today} = a x U today + (1-a) x AvgU yesterday
Wilder recommended a smoothing period of 14. This is by his reckoning of EMA smoothing, ie. α=1/14 or N=27.
Wilder posited that when price moves up very rapidly, at some point it is considered overbought. Likewise, when price falls very rapidly, at some point it is considered oversold. In either case, Wilder felt a reaction or reversal is imminent. The slope of the RSI is directly proportional to the velocity of the move. The distance traveled by the RSI is proportional to the magnitude of the move.
As a result, Wilder believed that tops and bottoms are indicated when RSI goes above 70 or drops below 30. Traditionally, RSI readings greater than the 70 level are considered to be in overbought territory, and RSI readings lower than the 30 level are considered to be in oversold territory. In between the 30 and 70 level is considered neutral.
Wilder further believed that divergence between RSI and price action is a very strong indication that a market turning point is imminent. Bearish divergence occurs when price makes a new high but the RSI makes a lower high, thus failing to confirm. Bullish divergence occurs when price makes a new low but RSI makes a higher low.
Wilder thought that "failure swings" above 70 and below 30 on the RSI are strong indications of market reversals. For example, assume the RSI hits 76, pulls back to 72, then rises to 77. If it falls below 72, Wilder would consider this a "failure swing" above 70.
by J. Welles Wilder
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