Introduction of technical analysis

I spent many hours on testing different technical indicators. Now I'm going to tell you the most important ones from my point of view.

1) Moving Average (MA). I love it because it tells me what trend currently prevail on chart. I'm using simple moving average although there are some more advanced varieties. I'm not in a hurry for complicated solutions. My methods are straightforward. There is only one parameter that needs to be chosen carefully. It is MA period that is responsible for time frame. This paremeter is simply a number of days that are taken into account.

I prefer 100 day simple moving average. Why 100? Because if you follow chart for the last several years, you'll see that trend is changing very rare. Of course there are some very big corrections, but they usually bounce and reverse after some point. You need to select moving average that would mistake rarely.

Danger occur when side trend is developing. It gives us no information and we better keep out of that market. We can't know for sure where the chart would go next. You could recognize side trend by seeing how much currency rate crosses MA.

2) Stochastic. There are 2 stochastics which can be used on day chart - slow and quick one. I suggest using quick one. It gives you motivation to open a trade when the market is oversold or overbought. You simply can wait till market gets overbought and make a sell.

I would recommend to make these decisions based on 2 stochastics at once. First stochastic you can set on a day chart and second one on an hour chart. When both stochastics becomes overbought (their index would be > 80) you can sell.

3) Resistance and support levels. Although there is no simle indicator showing you these levels you could find them yourself. Also you can read about DeMark method.

These levels are strong ones where market can either reverse or make a break through. Most of the time chart is trading between this two levels and sometimes it gets near to its borders. Generally before a break through there are some reverses. You can trade both ways. You have to be very careful, because market is going wild, when it is in these levels zone.

And thats it. I couldn't manage to work other complicated indicators. I combine those 3 in my strategies, together with current time on stock exchanges.