What are the best stock market indicators to use in a bull market?

Discussion in 'Investing and Retirement Saving' started by Raymond, Nov 18, 2015.

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  1. Raymond

    Raymond Newbie

    Are there any particular indicators that work well in bull markets compared to bear markets. We're still in bull territory in 2015 and I wanted to know if there was anyway to take advantage using specific indicators to maximize profits and minimize losses? Are there any indicators in particular which are suited to a rising stock market?
    Simrin likes this.
  2. Simrin

    Simrin Newbie

    If you want to trade the stock market successfully then you need to know what the best stock market indicators are. If you can successfully master some of the most effective indicators and then apply them to the best stocks then you will have a strategy that will make you money. You don’t have to be a mathematical genius to understand how to use an indicator, all you have to do is know what the exit and entry signals are and how to use the best stock market technical indicators.

    #1: EMA Overlays

    The first indicator that you need to consider is the overlays. Always use exponential moving averages 200 and 50. By using EMA200 and EMA50 you can tell whether the stock has entered into a bearish or a bullish trend. If EMA200 is above EMA50 then you are entering into a position where the stock is likely to trend upwards. If EMA50 drops below EMA200 then you are entering a position where the stock is likely to decline. Some investors use EMA200 and EMA50 to go into trades and have reported great returns.

    #2: ADX

    Another great indicator to use is ADX. ADX is able to find how strong a trend is likely to become. If the green line crosses over the red line then this usually indicates a bullish trend and when the red line crosses the green line from below this indicates a bearish trend. If you are able to enter and exit the trade using these signals in conjunction with EMA then you will have a strong case to enter a position.

    #3: Relative Strength Index

    RSI also known as Relative Strength Index shows how strong or weak the stock is. There is normally a 20 80 level. When the line crosses the 20 level from below you can enter a long position and close any short position you previously had. If the line crosses below the 80 level from above you can close the long position and enter any short position that you think may be profitable.

    #4: MACD: Moving Averages Convergence Divergence

    Another indicators that the professionals use is MACD, Moving Averages Convergence Divergence helps investors find convergences and divergences in price. If the price of the stock is continually going down however the MACD indicator is showing divergences then there is a possible case for reversal. If you are able to find divergences then these are some of the most reliable signals that you can look out for.

    Use All Together

    Using EMA200, EMA50, ADX, RSI and MACD you can create a formidable strategy that will help you achieve your financial goals in the stock market. The best way to use these indicators is to use stock market software called Metastock. Metastock allows you to back test all the stocks that are in your portfolio to check how good these indicators have performed in the past.

    Just imagine you have 200 stocks and you provide the software with exit and entry conditions using the above indicators then the software can check the past prices to see how effective this strategy would be. If you can find the 10 best stocks that conform to these indicators then you will have a formidable strategy.

    Sadia likes this.
  3. Sadia

    Sadia Administrator

    I've had some success using the bollinger Bands which measures volatility in stock. I find opportunities where the Bollinger Bands are being squeezed then enter a short or long position depending on which way I think the stock will go. When the stock price breaks out of the Bollinger Band and fails to get back inside after a rally it usually means the stock will fall so it makes sense to short it. @Miles Have you had any experience with Bollinger Bands?
    Miles likes this.
  4. Miles

    Miles Newbie

    I've used Bollinger Bands to help me determine the direction of the move once it breaks out of the band and tries to get in. Its a pretty reliable indicator based on volatility. I've used Bollinger Bands to confirm movement but I use other indicators which help me make better decisions like ADX, MACD and RSI. EMA and SMA overlays also help me.
    Sadia likes this.
  5. Sadia

    Sadia Administrator

    Thanks for the list of Indicators you use. I'll be sure to backtest them on Metastock to find out what the best stocks are to use.
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