Stock Indices Analysis is Based on 3 Factors Common in the Market:

1. Stock Indices Price Moves in Trends

Stock price movements follow trends. This means that after a trend has been established, the future stock market price movement is more likely to be in the same direction as a trend than to be against it. Most stock indices strategies are based on this technical analysis concept - trend trading.

2. Stock Indices Price Movement Discounts Everything

Stock technical analysis only considers price movement and assumes that, at any given time, stock price reflects everything which has or could affect the stock indices trading instrument including even the fundamental factors. This only leaves the study of stock price, which is a product of the supply and demand for a particular stock indices instrument in the trading market.

3. History Tends to Repeat Itself

History repeats itself mainly in terms of stock price movement. Repetitive nature of market movements is attributed to stock traders investor psychology: in other words, stock trade participants tend to provide a consistent reaction to the market most of the time. Stock technical analysis uses chart patterns to analyze these price movements. Although these charts represent historical data they are still relevant because they illustrate chart patterns that often repeat themselves.

List of All Stock Index Indicators - Stock Indices Analysis Explained PDF - Stock Indices Analysis PDF

Understanding this technical analysis of the trading market can be a valuable stock indices tool in determining the trend of any market and assisting with entry and exit levels for your stock trades.

The goal of these technical analysis methods is to help stock traders determine when the market is trending, & when it isn't. If the stock indices instrument is moving in one particular direction, then we want to be on board. If the stock indices trading instrument is not moving in a particular direction, all you are going to do is lose money as you will get whipsawed around and this is not what we want as stock indices investors.

Unfortunately, many traders fight the trend and buy or sell in the opposite direction of a this trend direction, trying to pick a top or a market bottom, only to see the market move further in the direction of the trend.

Another common mistake stock traders often make is adding onto a losing stock indices position, averaging a loss. This is not a good stock indices strategy especially in a strongly trending trading market. It is something which experienced investors never do. The trend is your friend, never go against it.

This technical analysis studies alert investors of stock indices setups and there are no certainties in financial trading market. Profits come from using proven stock indices strategies & stock indices methods to find a trending stock index and taking stock trades in the same direction of the trend.

With so many stock indices investors using similar stock indices tools, technical analysis can become a self fulfilling prophecy. If many stock indices investors use the same levels as a buying point, the price goes up as everyone will make similar technical analysis moves. However, the question is always how long these stock indices moves will last?

Understanding this technical analysis methods will give the charts some meaning when you look at them and apply technical analysis. Stock technical analysis will help you understand why certain price movements occurred.

Stock charts are used with indicators to look for chart patterns which have occurred in past under certain conditions. When these conditions are noted again, you can use the past chart patterns studies to make a buy or sell decision.

Some of the most common technical indicators include: Stock Indices Analysis Explained PDF

• Moving Averages Technical Indicator
• RSI Indicator
• Stochastic Oscillator
• MACD Indicator
• Fibonacci Retracement Indicator
• Bollinger Bands Indicator

Most technical indicators are pictured separately from the chart usually below it. This is because these indicators often use a different scale than that of the price chart.

Some of the technical indicators are shown on the price chart itself, such as Moving Averages and Bollinger bands - these indicators are referred to as price overlays.

Explanation of these indicators is found under the tutorial: List of All Stock Index Indicators - Learn Stock Indices Analysis Course

SUMMARY

1. Stock Indices Analysis Relies on Defining Probabilities
2. Stock Indices Analysis Uses History of Price Patterns
3. Stock Indices Analysis Uses Several Analytical Tools (Stock Indices Indicators)
4. Stock Indices Analysis Uses Stock Index Chart Patterns

Indices Analysis Examples

Most stock traders prefer technical analysis - learning the technical analysis methods also takes time to learn due to its nature which involves abiding by the technical rules.

To learn how to trade stock indices successfully, it is important that you understand the 3 strategies, outlined below:

1. Indices Trading moves will always follow a trend which can be identified by looking at the chart patterns or the candlesticks charts. If any stock indices investor tells you that you can also profit from the counter-trends consistently it will not be possible because the trend is the only proven method of making money in the trading market.

2. The market forces will drive the stock indices instrument prices up or down depending on supply and demand. Stock technical analysis seeks to measure the demand supply of a stock indices trading instrument using various technical analysis tools & indicators. The demand supply is reflected in the price action. Therefore, by simply looking at the price movements themselves you can try and predict what direction the price is likely to move towards using one or two technical indicators - technical analysis indicators like the moving average or support and resistance levels technical indicators.

3. The market not only shows the history of the past prices, but will also follow the trend that was in place, until its trend direction reverses. Some very important indicators used to determine these market movements are Moving Averages, MACD and Bollinger Bands Stock Index Indicators.

When price starts to consolidate, which means there is no trend, you should use a different approach to analyze the trading market. You should use support and resistance levels and breakout stock indices strategies to analyze the ranging market prices.

When the market retraces, you should use patterns & technical indicators to analyze whether the current trend will continue or reverse.