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Techniques and usage of various technical indicators
2022-03-22
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Analysis of technical indicators is a quantitative analysis method for judging exchange rate trends based on certain mathematical statistical methods and using some complex calculation formulas.It is an exchange rate analysis and forecasting tool that professional foreign exchange traders in the international foreign exchange market rely heavily on.
KDJ-Stochastic Index
illustrate
KDJ is the most commonly used indicator in trading.Combining the advantages of momentum,relative strength and average line,the relationship between the highest price,the lowest price and the closing price is mainly studied in the calculation process.It reflects the strength of price trends,overbought and oversold phenomena.
application
1.D%>80,the market is overbought;D%<20,the market is oversold.
2.J%>100,the market is overbought;J%<10,the market is oversold.
3.KD golden fork:K%crosses D%,which is a buy signal.
4.KD Sicha:K%breaks D%sell signal.
skills
1.When the K value(short-term average)is greater than the D value(ie,the long-term average),it indicates that the current trend is upward and upward,so on the graph,when the K line breaks above the D line,it is a buy signal.
2.When the D value is greater than the K value,it shows that the current trend is downward,so on the graph,the K line falls below the D line,so on the graph,when the K line drops below the D line,it is the time to sell.
3.When the D value falls to 10-15,it is the best time to buy,and if it reaches 85-90,it is a sell signal.
4.When the K line and the D line cross the high-grade second time,the market price will drop sharply,and when the low-grade line crosses the second time,the market price will rise sharply.
5.K and D cross at 50 for consolidation,this indicator has no clear buy or sell signal.
The pros and cons of Stochastic
The KD indicator is more accurate than RSI,and there are clear buying and selling points.However,when the K and D lines cross,you must pay attention to the appearance of"deception lines",because KD is too sensitive and easy to be manipulated.
Parameter Description
RSV days-default:9;K days-default:3;D days-default:3
MACD-smooth moving average
illustrate
MACD is a technical tool developed based on the advantages of moving averages.MACD absorbs the advantages of moving averages.Using the moving average to judge the timing of buying and selling is very effective when the trend is obvious,but if it encounters a bullish consolidation market,the signals sent are frequent and inaccurate.
The MACD developed according to the principle of moving averages,on the one hand,removes the frequent false signal defects of moving averages,and on the other hand,ensures the maximum results of moving averages.
application
1.MACD golden cross:DIF breaks through DEM from bottom to top,which is a buy signal.
2.MACD dead fork:DIF breaks through DEM from top to bottom,which is a sell signal.
3.MACD green turns red:MACD value changes from negative to positive,and the market turns from short to long.
4.MACD red to green:The MACD value changes from positive to negative,and the market turns from long to short.
skills
1.Both DIFF and DEA are positive,that is,when they are both above the zero axis,the general trend is a bull market.If DIFF breaks above DEA,it can be bought.
2.Both DIFF and DEA are negative,that is,when both are below the zero line,the general trend is a bear market,and DIFF falls below DEA,which can be sold.
3.When the DEA line deviates from the K line trend,it is a reversal signal.
4.DEA has a high error rate in the game,but if it cooperates with RSI and KD,it can make up for the shortcomings.
5.Analyze the MACD histogram,when it changes from positive to negative,it often indicates the sell,and vice versa is often a buy signal.
Parameter Description
DIF Parameters-Default:9 Fast EMA Parameters-Default:12 Slow EMA Parameters-Default:26
RSI-Relative Strength Indicator
illustrate
The RSI theory holds that in a normal stock market,the stock price can be stable only when the forces of the long and short sides are balanced.According to the normal distribution theory,random variables have the greatest chance of appearing in the area near the central value,and the further away from the central value,the smaller the chance of appearing.
In the long-term development process of trading,the relative strength index varies between 30 and 70 most of the time,with the most chances between 40 and 60,and the less chance of exceeding 80 or lower than 20.And the least chance is above 90 and below 10.Therefore,RSI is suitable for short-term investment in stocks and is widely used in the measurement and analysis of stocks.
application
1.RSI Golden Fork:When the 6-day RSI breaks through the 12-day RSI from bottom to top,there is a buying opportunity.
RSI Sickle:When the 6-day RSI falls below the 12-day RSI from top to bottom,there is an opportunity to sell.
2.RSI<20,it is oversold,if there is a W bottom shape,it is a buying opportunity.
3.RSI>50,the market outlook is optimistic;RSI<50,the market outlook is bearish.
4.RSI>80,overbought,if there is an M head shape,it is a selling opportunity.
skills
1.During the consolidation,the RSI is higher than the bottom,indicating that the bulls are strong,and the market may rise for a while in the future.On the contrary,the bottom is lower than the bottom,which is a sell signal.
2.If the transaction is still in the consolidation stage,and the RSI has been sorted out,the price will break through the consolidation zone.
3.The accuracy of RSI above 50 is high.
4.When there is a divergence between the RSI and the transaction,it is generally a signal of a turnaround.It represents a reversal of the general trend,and the right time to buy and sell should be chosen at this time.Combine the fast and slow RSI lines to determine the timing of buying and selling:combine the 6-day and 12-day RSI,when the 6-day RSI line on the graph breaks above the 12-day RSI,it is a buy signal.When the 6-day RSI line falls below the 12-day RSI,it is a sell signal.Especially when the RSI is below the low 30,the buy signal and the sell signal above the high 70 are extremely reliable.
5.When the anti-pressure line(downtrend line)of the RSI graph is 15 degrees to 30 degrees,it has the most anti-pressure significance.If the angle of the anti-pressure line is too steep,it will be broken quickly and lose the significance of the anti-pressure.On the contrary,when the support line(uptrend line)of the RSI graph is minus 15 degrees to minus 30 degrees,it has the most supportive significance.If the angle of the support line is too steep,it will be easily broken and lose the significance of support.
Pros and cons of the relative strength indicator
RSI reflects four factors of stock price changes:the number of days up,the number of days down,the magnitude of the rise,and the magnitude of the fall.It considers all four components of stock price,so its accuracy is more credible in stock price forecast.
Parameter Description
RSI parameter-default value:6RSI parameter two-default value:12
BOLL-Bollinger Bands
illustrate
Bollinger Bands uses the standard deviation of statistical principles to obtain its confidence interval.Compared with Envelopes,this indicator can adjust its variability more randomly.
application
1.The exchange rate crosses the support line upwards,a buy signal
2.The exchange rate crosses the resistance line upwards,a sell signal
BOLL usage skills
1.BOLL closing:the track is narrowed from wide to narrow,indicating that the market is about to break through(both up and down),and it should cause alertness.
2.The closing price falls below the lower track:it indicates that the support is strong and there is a possibility of a rebound.You can choose to consider buying when the price is above the corresponding lower track.
3.The closing price has risen above the upper track:it indicates that the pressure is strong and there is a possibility of a pullback,and it can be thrown out under the corresponding upper track.
4.The closing price has risen above the middle rail:at this time,once the pressure and weakness are felt at the middle rail,the middle rail is in the pressure zone,and it is a sell signal.
5.The closing price falls below the middle rail:at this time,once it is supported and firm at the middle rail,the middle rail is also a support band,which is a buy signal.
Parameter Description
BOLL line days parameter-default value:20;P sets the width of the BOLL band,the default value is 2
Some traders downplay the indicator,citing its latency,late entry,and inability to predict the market.These are just excuses.Some traders lose money not because they use indicators,but because they don't understand the rules of the game.They want to find the"right"indicator,so they keep trying new ones.However,indicators are just derivatives of price,and by their very nature they tell you what happened before,not what will happen after.If you use metrics with the wrong mindset,the results will naturally be disappointing.
The above information is provided by special analysts and is for reference only. CM Trade does not guarantee the accuracy, timeliness and completeness of the information content, so you should not place too much reliance on the information provided. CM Trade is not a company that provides financial advice, and only provides services of the nature of execution of orders. Readers are advised to seek relevant investment advice on their own. Please see our full disclaimer.
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