Free Stock Indicator Tools
Indicators help stock traders maximize returns and minimize risks. Advances in stock trading research and software are producing increasingly complex and sophisticated indicators that are supposed to help traders pinpoint the best buy and sell points to maximize profits and minimize risk while taking the guesswork out of trading. Many of the indicator tools come with stock charting software packages that are available online for a fee, but the best and most reliable indicators are simple and free.
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Importance of Indicators in Stock Trading
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Stock trading involves risk because traders must make decisions without complete information. A trader buys a stock because he assumes that the stock will do X, but he has no knowledge that the stock will perform as he expects. To minimize risk, a trader must use reliable indicators to help him determine the most likely direction a stock will move.
Stock Price
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Stock price in itself is the best and most reliable indicator. Stocks move in trends. Once a trend starts, it tends to remain in place until something forces it to reverse.
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Volume
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Volume confirms, or validates, a stock price trend. Volume is the total number of shares traded, usually in a day. It shows the dollar commitment investors and traders make. Multiply the current stock price by the number of shares traded to determine how much money is going in or out of a particular stock. The greater the dollar commitment, the more serious investors and traders are about a particular move, because they are putting their money where their mouth is. Volume fluctuates day to day, but the general rule is that it should go with the direction of the trend for that trend to be valid. Ideally, a stock in an uptrend should rise on a rising volume and fall on a falling volume.
Free Online Tools
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If stock price and volume are the most important and reliable indicators, any online service that provides free stock quotes is a free stock indicator tool. Real time quotes are more valuable than ones reported with a 20-minute delay. A stock chart also is a good indicator tool because it is a graphic representation of a stock's past price and volume action. Many financial websites provide free historical and live charts. Ultimately, it is more important for a stock trader to learn to interpret stock price and volume action correctly than to use multiple sophisticated online indicator tools.
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