7 Most Commonly Used Technical Analysis Indicators in the Stock Market

Indicators are used as a measure to gain further insight into to the supply and demand of securities within technical analysis. Those indicators (such as volume) confirm price movement, and the probability that the move will continue. The Indicators can also be used as a basis for stock trading, as they can create buy-and-sell signals.

1. On-Balance Volume

The on-balance volume indicator (OBV) is used to measure the positive(+) and negative(-) flow of volume in a security, relative to its price over time. It is a simple measure that keeps a cumulative total of volume by adding or subtracting each period's volume, depending on the price movement. This measure expands on the basic volume measure by combining volume and price movement. The idea behind this indicator is that volume precedes price movement, so if a security is seeing an increasing OBV, it is a signal that volume is increasing on upward price moves. Decreases mean that the security is seeing increasing volume on down days.

2. Accumulation/Distribution Line

One of the most commonly used indicators to determine the money flow of a security is the accumulation/distribution line (A/D line). It is similar to on-balance volume indicator but, instead of only considering the closing price of the security for the period, it also takes into account the trading range for the period. This is thought to give a more accurate picture of money flow than of balance volume. The line trending up is a signal of increasing buying pressure, as the stock is closing above the halfway point of the range. The line is trending downward is a signal of increasing selling pressure in the security.

3. Average Directional Index

The average directional index (ADX) is a trend indicator used to measure the strength and momentum of an existing trend. This indicator's main focus is not on the direction of the trend, but with the momentum. When the ADX is above 40, the trend is considered to have a lot of directional strength - either up or down, depending on the current direction of the trend. Extreme readings to the upside are considered to be quite rare compared to low readings. When the ADX indicator is below 20, the trend is considered to be weak or non-trending.

Stock Investing Strategies in the Philippine Stock Market

Do you already investing in the stock market? Do you follow strategy in your investing? Well, before you invest your money in the stock market, you need first to invest good knowledge and good strategy that will fits according to your lifestyle.

Here are the Stock Investing Strategies in the Philippine Stock Market:

1. Buy and Hold Strategy:

The Buy and Hold Strategy is a stock investing strategy where you buy a large amount of stocks in the present and sell in the future. This strategy is used for long-term investing where the investor sells the shares of stock 15 - 30 years after he/she bought it.

2. Peso-Cost Averaging Strategy:

The Peso-Cost Averaging Strategy is a stock investing strategy where you buy a share of stock with given set amount each month or each quarter or each year. For example: you buy a share of stock regularly in an amount of 5000 pesos for June 2008. This same amount of 5000 pesos you will be investing until May 2008. As you can see the figure below:

3. Market Timing:

The Market Timing Strategy is a stock investing strategy where you buy a share today and sell on the same day or on the next day or next week. This stock investing strategy is commonly used by the stock traders which they are timing the market buying the lower price of stock and sell at the higher price. 

Now, you already know the different stock market strategies. Now, ask yourself what stock market strategy that are you going to pursue. If you are not sure enough, then I recommend that you use the PESO COST AVERAGING for the beginners. But the decision is yours. I am just guiding you for your stock investing success. 

Invest in stock while you are young, and later you will happy that you did! Work hard and work smart, and make your money work hard for you. Happy Investing! :)