Top Down Approach

The top down approach in portfolio management seeks to analyse the major components driving the global economy which ultimately drives all financial markets. The most important task of a trader is to predict where market will be in 6-12 months ahead. The major components of the top down approach are: Global Economic Growth Analysis Global…
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Macroeconomics

Macroeconomics Introduction Macroeconomics analyses the performance of a nation’s overall economy using macroeconomic indicators like GDP, inflation, unemployment and Government Debt. This section analyses applied macroeconomics used by investors and traders to predict the global economy and countries’ economic and financial markets. This guide is based to a large extend on the great work of…
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Momentum Trading

Momentum trading definition Momentum trading is used to capture moves in shorter timeframes than trends. Momentum is the relative change occurring in markets. Relative change is different to a trend. A long-term trend can be up but the short-term momentum of a specific market can be 0. If a market moves down and then moves…
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Trading Psychology

Moving Average Definition A Simple Moving Average (SMA) is the average price of a security over a given number of days. Simple Moving Average is a momentum indicator used to monitor whether a security’s momentum is rising, falling or bound to reverse. The important timeframes to monitor the simple moving average are: 20 days (1…
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MACD

MACD definition The MACD is a trend deviation indicator using two moving averages. MACD is interpreted by using the signal-line crossovers as buy and sell signals. The MACD is a trend deviation indicator using two moving averages. MACD is interpreted by using the signal-line crossovers as buy and sell signals. The MACD is composed using…
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Volume indicators

Volume indicators are especially important technical analysis indicators. They must be examined in conjunction with a security’s price movements. High levels of trading volume indicate a significant price move. A consolidated breakout followed by high trading volume confirms the move. Trades with lower than average volume should be avoided. How to use volume indicators When…
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Moving Average

Moving Average Definition A Simple Moving Average (SMA) is the average price of a security over a given number of days. Simple Moving Average is a momentum indicator used to monitor whether a security’s momentum is rising, falling or bound to reverse. The important timeframes to monitor the simple moving average are: 20 days (1…
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RSI indicator

RSI indicator definition The RSI indicator measures the speed and change of price movements. The RSI indicator oscillates between 0 and 100. RSI is a useful indicator during normal trending market conditions when an asset price oscillates around its trend value. During big moves and strong trends however, like short squeezes or price spikes RSI…
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Oversold Stocks

What is an oversold stock A stock is oversold when it is subject to a persistent downward pressure due to extreme fund outflows. When a security is oversold it is often due for a rebound. There are two types of oversold stocks, fundamentally oversold stocks, and technically oversold stocks. The most common fundamental oversold indicator…
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Overbought stocks

Overbought Definition A security is overbought when it is subject to a persistent upward pressure due to extreme fund inflows. When a security is overbought it is often due for a correction. There are two types of overbought indicators, fundamental overbought securities, and technically overbought securities. The most common fundamental overbought indicator of a stock…
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