Trend prediction indicator forex

However, if you have an eye for spotting market trends , you can make a neat pile in quick intra-day deals. There was a time not long ago when trading was a simple game of buying and selling stocks based on one's conviction. Now, technical analysis- a science of predicting future prices from historical price data-has given investors new tools.

But, we reiterate what we mentioned in our report, "The Kick of Quick Bucks," in the October issue, though day trading looks easy, nobody can take the right call every time and there will be days when one loses money, at times a lot of it. How it works Technical analysis is done on the basis of historical price movement plotted on a two-dimensional chart.

One reason it has become popular is that anybody can look at the chart and see how prices have moved. For example, in the chart, Easy Reading, you can see open, high, low and closing prices of the Bombay Stock Exchange Sensex on July 7, How to pick a stock Good volume and volatility are a must to gain from trading.

HOW TO READ THE GRAPHS?

While volume should ideally be at least , shares, the stock should have a high beta, or volatility. Those who don't understand the concept should see to it that the difference between intra-day high and intra-day low prices of a stock is at least Rs Identifying the right stock and fixing a stop-loss level is a must, says Paul. One must stick to the stop-loss. Generally, stop-loss is fixed at 1. Big traders generally fix stop-loss at about one-third of the expected profit. Once you zero in on the stock, look at its volumes and price trends. Generally, higher volumes with higher price rise indicate an uptrend, but it should not be considered a thumb rule.

Big volumes and large moves sometimes throw up big tops and bottoms, says Barrett. This means if both volumes and prices are increasing, it may be the last leg of the rally. Stock Trends Identifying trends is important. But how do you spot a trend? It's difficult, as the market never moves in a straight line.

A stock will never fall continuously on a given day and rise on another. Look at news related to the stock," says Chouhan. For example, if the rupee is falling against the US dollar, it's common knowledge that technology companies will gain. Analysts and market experts take the help of various parameters to confirm if a stock is a trade pick. The most used are available in any technical analysis software.

Defining a Trend

These include day moving average, relative strength index, moving average convergence divergence, or MACD, Fibonacci retracement and candle stick price chart. The terms may sound daunting, but software available nowadays makes technical analysis easy. Click here to Enlarge Moving Averages One of the widely used tools is the day moving average.

You simply have to plot the day moving average on the price chart. When the price of the stock rises above the moving average line, it's a buy signal, and when the price falls below the moving average line, it is a sell signal. One can also look the day moving average or the day moving average.

Trading is a game of probability. So, you have to arrive at your own methods to decide which parameters suit you the best. In the graph, Moving Averages, you can see the Sensex movement compared to the day moving average of the Sensex. The brown line is the moving average line.

In February, the line went above the price bars and the Sensex started falling. When the day moving average fell below the price bars in April, the markets started going up. Price did not close with excessive daily losses this week, and the weekly close is similarly muted compared to historical precedent. The Australian dollar spent the week knocking against major support at 0.

Thursday's dip to 0. The Forex Forecast Poll is a sentiment tool that highlights near- and medium-term price expectations from leading market experts.

This graph is available for each time horizon 1 week, 1 month, 1 quarter. We also indicate the average price forecast as well as the average bias.

Traders can check if there is unanimity among the surveyed experts - if there is excessive speculator sentiment driving a market - or if there are divergences among them. When sentiment is not at extremes, traders get actionable price targets to trade upon. When there is deviation between actual market rate and value reflected in forecasted rate, there is usually an opportunity to enter the market.

No lag in the data : Contrary to other indicators, there is no delay. A very useful tool to combine with other types of analysis of technical nature or based on fundamental macro data, like trading positions , rates table or live chart. Significant sentiment data , based on a representative sample of 25 to 50 leading trading advisors for 5 years.