Online Stock Trading Tips

S&P 500 index in the US is one of the most widely traded in the futures market. Popular associated products include E-mini, etc. However, since this is very popular and with high trading volume, this is a very volatile market and needs simple analysis. One of the most popular technical analyses to any stock market is moving average.

Moving average is a lagging indicator and is used as “trend following” tool. If the moving average is bearish, it indicates the trend of the indexes is bearish. Moving average is the average of certain number of points in time. For example, MA50 is a 50 day moving average (the number samples/days is 50). A longer moving average such as MA200 is the average of stocks/indices over the last 200 days.

The longer the moving average samples, the smoother the trend, but the more it will lag behind the real action. On the other hand, support and resistance is one of the most popular tools for technical trading. More often, traders will look at charts to determine the support and resistance value at a certain point in time.

A price reaches the support level means that it is too low that everyone stops selling and starts buying again. A price is in the “resistance” level when the price is too high when everyone stops buying but instead sells at this point. (more…)