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Written by Administrator
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Monday, 11 June 2007 |
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Indicators try to make life easier
for us by showing us calculated information we can't easily see on the
basic graphs. Like the average price over 20 days, the buying or
selling pressure over time, the strenght of daily closing prices
compared to the daily trading range and so on. Ultimately, indicators
should give us clearly viewable triggers to buy or sell a stock.
Needless to say, when such an indicator would actually exist, we would
all be rich, so it doesn't.
To make matters worse,
indicators can give different results at a certain moment in time,
depending on the intervals they are working with. So an indicator can
be negative on a daily graph, while the same indicator would be
positive on a weekly graph. It's useful to view the indicators on
different time scales, starting with weekly graphs spanning several
years and zoomin in to the daily or intraday level to get a better
perspective of long term and short term trends.
You
understand indicators should be handled with caution: they may seem
very advanced, but in fact they are unintelligent automatic algorithms.
The only intelligent thing about indicators is the brain that studies
them: you.
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