What is a Technical Indicator?
Technical indicators are elements that predict the future performance of stocks in a given set of market conditions. Sometimes used to predict short-term trends, a technical indicator often focuses on the upward or downward movement of price associated with a given stock. In other applications, a technical indicator may be analyzed in order to predict the next short term movement that will occur with a market in general. Sometimes referred to as technicals, indicators of this type are often based on mathematical calculations which take into consideration the current relationship between the stock price and the general movement of the market where the stock is traded. This means that a technical indicator does not consider a number of other factors that often are of concern to the investor. Still, technicals do offer valuable insight into how a given stock is likely to perform in a short period of time. Investors who choose to focus their trading activity on short term deals that involv
Advertisement ‘); //–> A technical indicator is a series of data points that are derived by applying a formula to the price data of a security. Price data includes any combination of the open, high, low or close over a period of time. Some indicators may use only the closing prices, while others incorporate volume and open interest into their formulas. The price data is entered into the formula and a data point is produced. For example, the average of 3 closing prices is one data point ( (41+43+43) / 3 = 42.33 ). However, one data point does not offer much information and does not an indicator make. A series of data points over a period of time is required to create valid reference points to enable analysis. By creating a time series of data points, a comparison can be made between present and past levels. For analysis purposes, technical indicators are usually shown in a graphical form above or below a security’s price chart. Once shown in graphical form, an indicator can then be com
A technical indicator is best described as a mathematical formula or procedure that is applied to a data set to yield a result. In the case of the stock market the data set is the historical trading data for a stock and the result is an indicator. The technical indicators employed by Netquote Prophet yield two result types, either Bullish indicator or a Bearish indicator. What are bullish and bearish indicator? “Bullish” is a term used in financial markets to signify optimism and confidence that security prices will trend higher. When using Netquote Prophet the term bullish refers to a specific stock, (“bullish on BHP”). The opposite of a bullish market is a bearish market or bear market. Bear markets are markets dominated by pessimism and falling prices. Netquote Prophet uses forty nine of the most popular and proven technical indicators to rank stocks from top to bottom. That is, it ranks stocks that are showing the most bullish indicators to stocks showing the least. This is what ma
