subject: Technical Analysis Indicator - Using Secondary Measures To Improve Your Timing [print this page] There are many endeavors in life that depend on your sense of timing in order to be successful. Waiting for a pair of shoes to go on sale will save you money, and picking the right moment to inform your boss about an innovative idea for the company just might earn you a promotion. The same principle holds true in the stock market, when making a trade at one point in the day can make you hundreds of dollars, while waiting just a few minutes longer would have made you thousands. If you're interested in doing everything you can to improve your market timing, you've got to depend on a technical analysis indicator.
In case you've never heard of the technical analysis indicator before, you should know that it is simply a signal that can be gathered from data on your stock charts, and used to tell you which position will put you in the best path for making a profit. Because monitoring the stock charts looking for patterns and trends is the primary way to track stock price movements, indicators are considered to be secondary indicators, but this doesn't make them any less important.
If you're a new investor look for ways to make smarter decisions about when to buy and when to sell, it's important that you learn the difference between the two different types of technical analysis indicator. First, there is the leading indicator, which will always emerge before price movements. It is for this reason that the leading indicator is considered to be a predictive indicator. The second type of market indicator is the lagging indicator, which usually emerges after the price movement, making it a confirmation tool.
When new investors are looking for a leading technical analysis indicator, it's important to keep in mind that they are usually the strongest during times of lateral or non-trending market movement. On the other hand, lagging indicators can still be found and used during confirmed trends. Indicators will also include two of the most popular types of movement, called crossover and divergence. As their names might seem to indicate, the crossover occurs when two different moving averages intersect each other, and divergence occurs when the direction of the price trend and the direction of the indicator trend to move away from each other. Being able to spot and interpret these movements quickly will give you an advantage as a trader.
