Learn Indices Courses

Indices is one of the largest financial market in the world. Traders invest in the market popularly known as Indices for speculation purposes. Traders are attracted to indices because of the following grounds:

Trading Leverage -trading leverage means that traders can make more money in indices by investing little of their own capital. This is because traders can borrow money to trade with from their indices broker using leverage.

Liquidity - The fact that indices trading is one of the biggest financial market in the globe/world means that at any particular given moment there are very many traders and investors trading this market - whether day or night there is always someone trading throughout all times during the market trading week. The fact that in this market there are many traders and investors, makes this online trading market very liquid: meaning that a trader trader can open & close a trade within a matter of seconds.

Low Transaction Cost - Because in indices there are many traders trading at any one given time means that trade costs are lower due to this big volume of trade positions taking place in the market. The only transaction cost paid by the trader is the spreads; no other cost is paid by the traders. The spread is also only when one opens a trade: therefore if a trader does not trade then they do not pay any cost.

This learn indices tutorial presents the various education courses that technical traders or traders that want to learn analysis can learn from. After traders have learned the basics of indices trading it's then time to learn more about analysis tutorials that they can use to trade with.

The technical analysis courses can tutorial beginner traders on how to study the various analysis concepts.

Basics of Indices Technical Analysis

Candlestick Charts

For traders the basic technical analysis tool which they use is the trading chart. There are 3 types of charts: line charts, bar stock indices charts and candle charts. The type of chart most often used by traders is the candlestick chart. This is because the candle chart has got a visually appealing/identifiable format which clearly represents the movement of market prices, by displaying different colors for different movements; that blue color when prices close higher than where they opened or red color that represents when prices close lower than where they open. In addition these candlesticks show the distance between the open and close price & this forms the body of the candlestick. This body of the candlestick is looks similar to the wax part of a real candle. The highest point of price will be drawn using what is referred to & known as a shadow, this shadow is a thin poking/protruding line that is drawn above the candle & it looks very similar to the wick of a real stick. There's also another shadow drawn below the candlesticks & this represents the lowest point of market price.

The information drawn by the candlesticks is known as OHCL - which represents Opening price, High, Low & Closing price.

Japanese candles were created in Japan by a traditional rice trader that used to trade futures, his name was Homma Munehisa, he later moved to trading the Tokyo market that was in 18^th Century and he made a fortune trading the Tokyo market using these candlesticks: He's said to have made over a 100 consecutive winning trade transactions.

In addition to showing the graphical representations of price traders also use candle patterns to gauge and determine the momentum of the price movement. Traders also study these candle patterns so that to learn how to interpret and trade signals from the various different candle patterns. Traders wanting to about the various candlesticks patterns can learn from our indices section under the technical analysis topics, the various candle patterns used to trade Indices are:

1.Long and short Candles

2.Spinning Tops and Doji Candles

3.Hammer Candlestick Pattern and Hanging Man Stock Index Candle Pattern

4.Inverted Hammer Candlestick Pattern and Shooting Star Stock Index Candle Pattern

5.Piercing Line Indices Candle Pattern and Dark Cloud Stock Index Candle Pattern

6.Morning Star Candlesticks, Evening Star Candlesticks & Engulfing Candlesticks Patterns

Support and Resistance Levels

Some traders also refer to these levels as support and resistance lines. The concepts of support and resistance levels refers to price levels where it's difficult & hard for price break through & move beyond these levels.

At these levels traders are likely to perceive the price of the indices instrument as being cheap or as being expensive.

Support

Support prohibits price of an asset from getting pushed downward. Support levels are therefore considered as the floor because these trading price levels prevent the market from moving prices downwards past a certain point.

Resistance

Resistance stops price of an asset from getting pushed upwards. Resistance zones are therefore considered as the ceiling because these trading price levels prevent the market from moving prices upward.

Therefore, these levels might & may be used by trader to identify where to open trades at the points where there is a high risk to reward ratio. For example a trader may open a buy position at a support zone and place a stoploss order a couple of pips below that point. The trader buys at this point/level because they perceive price to be cheap. One may open a sell position at a resistance area and place a stoploss order a couple of pips above the resistance level. The trader sells at this point because they perceive that at that point the price is very expensive and therefore there will be less people willing to buy indices because the price is very expensive and hence the price is likely to start moving down soon rather than continue to move upwards.

Trend Lines

Trend-Lines are used to identify the over-all direction of the market.

Sometimes support and resistances are formed diagonally on a similar way like a stair case. This forms a trend, a indices trend is a sustained movement in one direction either upward or downward.

A trendline depicts these points of support & resistance for indices price.

Trend line is an aspect of analysis that uses line studies to try and predict where trading price will move next.

A trend-line is a straight diagonal line which connects two or more trading price points and then extends into the future to act as line of support or resistance.

Trend Lines are based upon the idea that the markets move in trends. Trend Lines are used to display three things.

The general direction of price trading movement up or down.
The strength of the current indices price movement and
Where future support & resistance of the current indices price move are likely to be located.

If a indices trendline forms in a certain direction then trading price usually and generally move in that direction for a time period until a time when the trend-line breaks-out.

Upward indices trendline - If price is heading up then a line is formed that's also moving up. This line is called an upward indices trend-line.

Downward indices trendline - If the price is heading downward then a line is formed which also moves downward. This line is called a downward indices trendline.

Moving Averages Indicator

MAs are also used in indices to identify the general direction of the market. MAs is a indices trend following indicator which is used to illustrate the trend direction of price.

Most common technique of determine direction of the market trend is by using two moving averages to form the MA crossover indices system. The MA crossover stock indices system is discussed in our indices strategies section. The MA Moving Average crossover system is made up of two moving averages one with a lower period and the other with a higher period, for example one may use the 5 period moving average MA & the 7 period MA moving average, when trading price is moving up the 2 MAs also will be moving up & when prices are heading down the 2 moving averages also will be moving downward. Traders also can identify when a indices trend changes its direction because the two moving averages will cross over each other once there is a change in direction of price movement. This cross-over signal is used by stock traders to identify when to execute a new trade after the crossover signal has been generated and the two moving average start to move in the same direction. This cross-over signal is also used to identify when to close out a trade position and take profit after there's a cross over in the opposite trend direction.

Bollinger Bands Indicator

Bollinger Bands is a very popular stock indices indicator, it is also a indices trend following indicator & it is used to illustrate the general and overall trend of the market. The Bollinger bands is made up of 3 lines, these are:

·Middle band - this is a moving average of 20 indices price periods

·Upper Band - shows upper limit of price

·Lower Band - shows lower limit of the price

Middle band will show the over-all direction of the market price trend whether up/down.

The upper band is where a trader will execute a sell trade if the market trend is downwards or close their buy trade and take profit at this level if the market is trending upwards.

The lower band is where a trader will execute a buy trade if the market trend is upwards or close their sell trade & take profit order at this technical level if the market is trending downwards.

Indices Fibonacci Retracement Levels

Fib retracements are popularly used to identify the levels where the trading price retracements are likely to reach and get to. Traders use these retracement levels to identify where to open trades after a indices price pullback.

Fibonacci retracement levels are covered & explained in the learn indices learning lessons section of this site under the trading analysis topics. Trader can learn how to use the Fib retracements, which levels are oftenly used to open trades & how to plot the retracement levels using Fib retracement indicator.

All these technical analysis techniques are also covered on the strategies section of this learning indices course site & trader can learn more about these concepts & get examples of these concepts are used in trading from this trading strategies section that has numerous screenshots illustrations of these technical tools and how they are drawn on charts along with explanation of they are used to generate signals.

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