If you can read an email, you can print cash with this 1500 pips a day Strignano’s Forex Signal Service and learn how to trade like pros from Tom Strignano- an EX CHIEF BANK TRADER. Know this Dow Futures never lose trade secret that can make you rich. Get these three FREE investing reports and discover a Stock Trading Course that can make you rich.Technical analysis is the thing if you are really serious to become a trader. Without learning technical analysis, you cannot become a successful trader. Technical analysis depends on two things. Charts and technical indicators. You need to master both, if you want to become a winning trader. Technical indicators are of two types namely leading and lagging. These indicators are very important in judging the future direction of the price action in the market. Without knowing these indicators, you are doomed as a trader!
Now as the name implies, leading indicators are ahead of the market. They provide buy and sell signals prior to the new trend or a reversal in the trend occuring. Now, one of the most important leading indicator that your should be familiar with is the pivot points. Pivot points are used in stock, forex, futures or any other market. But when used alone these leading indicators can provide false signals. Other leading indicators are the oscillators like the RSI ( Relative Strength Index), stochastics and so on.
On the other hand, as the name suggests lagging indicators are lagging behind the price action. Lagging indicators are often later. Sometime too late in giving the buy or sell signals. Since these indicators are lagging, they tell you about the reversal in the trend or the start of a new trend afterwards that might be late for you. Most popular lagging indicators are the Moving Averages. Moving averages are of three types; 1) Simple, 2) Exponential and 3)Weighted. Another very important lagging indicator is the MACD ( Moving Average Convergence Divergence). Moving averages and MACD are widley used by stock traders, forex traders, futures traders and options traders!
Stochastics is a very popular leading indicator widely used by traders in different markets. Stochastics uses a complex statistical formula to give a overbought or a oversold signal. This indicator has value from 0 to 100. When it touches the 80 level from below, the market is thought to be overbought and when it touches the 20 level from above the market is considered to be oversold.
However, MACD ( pronounced Mac Dee) on the other hand is a lagging indicator. MACD uses three exponential moving averages 12,26 and 9. 12 exponential moving average is faster. 26 exponential moving average is slower. The 9 exponential moving average gives their difference.
Now, professional traders combine the stochastics with the MACD on 1 Hourly charts to identify the trend for the day. What you need to do is master the use of these leading and lagging indicator combination!