The ability to analyze stock trends is an essential first step in choosing a transaction. It’s a simple process, but it’s often overlooked. Once you master the concept, you are ready to start a strong deal. Or, as an options trader, you’ll have all the basic information you need to sell your credit spreads and short options. It’s a powerful tool, but the downside is that many operators don’t trust its simplicity and analyze and get too much information. There are two main steps to finding a stock trend using four indicators. “Fashion is your friend”
Step 1: Find market trends
In many cases, most stocks follow market trends, unless there is a reaction that goes against market trends. Many traders make the mistake of starting an exchange just to make sure they are betting on the market (I did this once!). Almost all major indexes do, but I prefer to use the S & P 500 just because it is the most representative of the general market. You can also view stock sector trends as a backup. In essence, you need tools to find trends and to measure the strength of trends. Then use the other two indicators to make sure the reversal is not imminent. Visit:- https://www.internet-navigator.de/
Use the balance of the moving averages to determine the direction of the trend. You can use 10 and 30 days in the medium term. It shows whether the market is on an uptrend, sideways or downtrend. If the 10-month line is above the 30-month line, it means that the stock price for the last 10 days has been trading higher (on average) than the last 30 days, which means it is on an upward trend. To do. The farther the two lines are, the stronger the tendency. However, there is a more objective way to measure the strength of a trend using the Wilders DMI, also known as ADX. When the ADX exceeds 25, the ADX becomes stronger regardless of whether the trend is rising or falling. ADX does not display the direction, only the force in the direction.
Once you have determined the direction and strength of the trend, you need to check the RSI and VIX. If the RSI is less than 30 or greater than 70, it indicates that the trend has been going on for some time and a reversal may occur. Please note. VIX shows a similar situation. The Fibonacci line also helps determine when a reversal is approaching.
Step 2: Find stock price trends
Once you have determined the market trends, focus on the stocks you have selected. We will only use the exact same indicators, but this time we will use them in a more strict sense. The balance of the moving average indicates the direction of the trend, and ADX indicates the strength of the trend. The RSI helps determine how close it is to an inversion. You can also look at the Fibonacci or support / resistance lines to see how far the trend can go.
As soon as you determine that your stock is trending, you are ready to trade or sell your credit spread. If the trend is positive and you have enough money to meet your margin requirements, you can sell worthless call options. Alternatively, you can use fluctuations within the trend band to perform some short-term swing trading, either directly on the stock or through options. By trading, you can get a much better return on the same investment.