| Confirming Your Observations | | | | It's important for new investors to learn that there |
| If you ask any experienced investor what the most | | | | are two main types of technical analysis indicators, |
| important rule of being a successful trader is, they'll | | | | called leading and lagging. True to its name, the |
| tell you if you learned nothing else but "buy low and | | | | leading indicator will always happen before the |
| trade high" you'll still be able to navigate the chaotic | | | | noticeable price movements, giving them a predictive |
| environment of the stock market with relative | | | | quality that technical analysts love. On the other |
| safety. The only problem with this time honored | | | | hand, a lagging indicator will always follow price |
| adage is that you have to figure out when the lows | | | | movements, meaning that technical analysts are fond |
| are low enough, and the highs are high enough. | | | | of using it as a confirmation tool. Leading indicators |
| Misjudging these levels, even by a little, could mean | | | | are considered to be strongest during times of |
| the difference between a modest profit, and a party | | | | sideways or non-trending market activity, while |
| celebrating your new tax bracket. Technical analysis | | | | lagging indicators are still viable during confirmed |
| indicators are an important part of any trader's | | | | trends. |
| toolbox for confirming what you think you've seen in | | | | Using crossovers and divergence, technical analysis |
| the market. | | | | indicators form buy and sell signals that are used by |
| If you've never heard of technical analysis indicators | | | | investors to guide their trading decisions. Crossovers, |
| before, you should know that they are calculations | | | | take place when prices move through the moving |
| based on the volume and price of a certain stock, | | | | average or when two different moving averages |
| and are used to measure things like money flow, | | | | intersect each other, and are considered to be the |
| trends, volatility and momentum in the market. Even | | | | most popular signal. Close on the crossover's heels is |
| though they are considered to be secondary to the | | | | the divergence factor, which is easily identified by |
| actual monitoring of price movements these | | | | looking for the direction of the price trend and |
| indicators are valuable because they provide traders | | | | watching for the direction of the indicator trend to |
| with additional information about the process of | | | | move away in an opposite direction. When they see |
| stock cycles and allow them to learn more about the | | | | this happen, investors know that that the path of |
| securities in which they're interested. | | | | the price trend is growing weaker. |