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3 Different Oscillating Indicators Explained For Stock Market Traders

03/24/2011 08:38 AM

Technical analysts make use of trend following as well as oscillating indicators to convert price data into simple indicators on charts that can end up being comprehended very easily. As the titles would suggest, the trend following indicator tracks stock prices that are trending in a specific direction. An indicator that oscillates is useful whenever the stock price is boxed within a particular range. This latter kind of indicator features a couple of sub-types. It can be of the sort that's charted against a baseline or one which has an upper and a lower limit. MACD is a well-known indicator with a baseline, and RSI is one which has a 0 to 100 range. MACD is short for Moving Average Convergence/Divergence and RSI stands for Relative Strength Index. Let us analyze these in more detail, in addition to others that are also well-known. Gerald Appel created MACD to help enlighten traders about bullish trends that were about to reverse and plunge into a bearish one, and vice versa too. The way it functions is that two moving averages (usually 12 & 26 periods) over different periods are charted for comparison. The MACD can also be plotted as a histogram, so that the histogram bars grow smaller as the price starts turning around to move back in the other direction. The bars get longer right after hitting the baseline, when the trend is still increasing in strength. This shows visibly the strength (or lack thereof) of the downward or upward trend prior to the individual moving averages do it independently. RSI, as stated above, carries a value that will vary from 0 to 100. Traders will receive a signal once the RSI value is 30 or 70. Thirty means the stock is oversold whereas 70 means it is overbought. An upward trend is when the RSI reaches 50 and is increasing, while a downward trend is when it gets to 50 and is on its way down. Much like RSI, Stochastic also have a 0 to 100 value. But the indicators in this case are sent on 20 and 80 for over-sold and over-bought states, respectively. Commodity Channel Index (CCI) is a baseline indicator that varies from +300 to -300 using a 0 baseline in between. An indication for an over-sold condition is sent at -200 and for an over-bought state at +200. These are all oscillating indicators which need selling price information for input and mathematical equations to convert the data into the charts. The resulting display sheds light on historical prices, shows existing trends and assists investors forecast future trends. Practically speaking, they offer entry & exit points for trades. Put simply, the indicator tells the trader precisely when to buy a stock and when to sell.

7 Types of Economic Moats to Help You Make Money?

03/19/2011 01:27 AM

There are many factors you should consider when choosing those best-of-breed businesses that have great growth potential and are capable of generating substantial profits for you over the years. So, how important is it that a company has a well-established economic moat? The short answer: crucial. An economic moat refers to the notion that the business has some durable competitive advantage, not unlike a moat that protects a castle from attack. The wider the moat the easier it is to fend off attackers. Finding a business with a wide moat is key to finding a successful business to own; the wider the moat, the more predictable its future 20 years down the road. Having a competitive edge, allows for a company to have a degree of predictability. As an investor, you are looking for not only sustainable growth rates but also consistent growth in cash flow, equity and sales over a 5 to 7-year period of time. With increasing cash flow, profitability for both the business and you the shareholder arises. With increasing cash flow, a best-of-breed business can whether the ups and downs of the economic business cycle paying off debt when needed or investing capital for expanding into new markets. Wide moat companies are also protected from inflation since their 'monopolistic position' enables them to raise prices at will. Here are seven types of economic moats to look for in a potential business: Brand - a product or service you're willing to pay more for because you know and trust it. Companies like Disney and Nike have good brand moats. Secret - a patent, copyright or trade secret that makes competition difficult or illegal. Examples of these companies are 3M, Pfizer and Apple. Toll - having exclusive control of a market through government approval or licensing thus being able to charge a 'toll' for accessing that product or service. Such businesses as PG & E, a utility company and Time Warner a media business fit the mold. Switching - being too much trouble to switch to another provider due to the high monetary and time costs. Microsoft and H & R Block are two good examples. Low Price - products priced so low no one can compete because they enjoy massive economies of scale due to a huge market share. Both Home Depot and Wal-Mart are examples of businesses that have used pricing to establish an economic advantage. Network Effect - the ability to quickly dominate a network of end-users by being first in the market. EBay was the first online auction business to dominate the North American market. Unique Corporate Culture - a way of doing business that would be difficult to duplicate in another business environment. Southwest Airlines benefited from this type of economic moat in the early years. You need not find a company with multiple moats to consider it to be a potential investment candidate. It should have one moat that seems hardest to cross and one that is sustainable long-term. Once again, the establishment of a viable economic moat shows up in the fundamentals. Companies with consistently high growth rates of over 10% per year in sales, equity and free cash over many years are the ideal candidates.

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Latest News about private investments

3 Different Oscillating Indicators Explained For Stock Market Traders

7 Types of Economic Moats to Help You Make Money?