I always hear people talking about using price as a great method to trade stocks by, could someone explain some methods?
I am always looking for new methods to trade and would like to learn as much as I can about some techniques using price.
Please feel free to go into depths and provide links.
Trading indicators are best used along with money management and good risk control, using trading indicators alone will not enable you to be a successful trader, even if you learn everything about trading indicators the market is just too random and unless risk is controlled, over time your account will slowly get wiped out, regardless how good a “trader” you think you are.
This question was about trading indicators and there have been some pretty good answers that should help in your trading, and especially in relation to trading indicators, the answer has been posted in the categories listed below:
What you’re talking about is Technical Analysis.
Price is not an indicator. Indicators are derivatives of price.
Moving averages, momentum indicators, fibonacci levels are all used as indicators to trigger an entry or exit when price moves to a certain level.
Here is a good reference for definition of finance terms.
Read all you can, develop a plan, then test your plan on a simulator before trading away your hard-earned money.
http://simulator.investopedia.com/
Books
"Which Is Better, Buy-and-Hold or Market Timing?"
"Do You Have What It Takes to Be a Market Timer
Droke, ClifTechnical Analysis Simplified
Kahn, Michael N.Tech. Anal. Plain & Simple
Kamich, Bruce M.How Technical Analysis Works
Lefevre, Edwin – Reminiscences of a Stock Operator
about Jesse Livermore
Lofton, Todd – Getting Started in Futures
Lowenstein, RogerBuffet (Warren)-The Making of a Capitalist
O’Neil, William J.How to Make Money in Stocks
Oz, TonyHow to Make Money From Wall Street
Rotella, Robert P.Elements of Successful Trading, The
Schwager, JackStock Market Wizards
Schwager, Jack D.New Market Wizards
Sperandeo, VictorTrader Vic-Methods of a Wall Street Master
Wasendorf, RussellAll About Futures
Slutsky, Scot and Darrell JobmanComplete Guide to Electronic Futures Trading, The
Extraordinary Popular Delusions and the Madness of Crowds" by Charles Mackay
The Intelligent Investor, by Benjamin Graham
One Up on Wall Street, by Peter Lynch
Common Stocks, Uncommon Profits, by Philip A. Fisher
Stocks for the Long Run, by Jeremy Siegel
Bulls Make Money, Bears Make Money, Pigs Get Slaughtered, by Gallea
Trading for a Living, by Alexander Elder
From Riches to Rags, by I.C. Freeley
Millionaire Traders, Lein & Schlosberg
How familiar are you with Japanese candlestick price patterns? With candlesticks, price action is used as an indicator of what the short-term trend will potentially do. If there are are series of two or three bullish price bars, that price strength can be an indicator of continued upward movement (or downward for shorts).
Personally, the deciding factor for whether I’m going to buy or exit a stock is price strength or weakness. So in that sense I am using price as an indicator. Keep in mind, I also use other indicators like ADX and Stochastics and an above average volume day doesn’t hurt either.
In trading, probabilities play a strong role. Buying a stock on a strong upward price movement at the beginning of a trend will work better than buying a stock that’s down for the day. A downward moving stock is not in your favor.
How about if you are looking at two great stocks you want to buy. One has a resistance point 5% away from the current price and the other is at a 52-week high. Both have a strong bullish day. Which would you buy? The stock with the prior historical price high would indicate that when the price hits that old high where the price broke down, it will possibly break down again as those old sellers want to dump some stock. In that sense, price has indicated the probable price behavior.
Technically, is price an indicator? Probably not, but it’s used as one. I would suggest further study about Japanese candlesticks (there are some good websites on this – candlestickler is one I think) and support/resistance.
Sounds like you are truly interested in stock trading – keep it up because learning about stock trading is well worth your time. Best of luck.
you need to get daily updates of companies you are eagr to invest into… for that you can visit share trading sites like Mansukh, Sharekhan etc..