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 trading because of the following reasons:

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 globe means that there are very many traders trading the market at any time of the day or night during the market week. The fact that there are many traders investing in this market make the market a very liquid market meaning trader can open & close trade in 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 because of this big volume of trades 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 a trader 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 who want to learn analysis can learn from. After traders have learnt the basics of indices trading it is then time to learn more about analysis topics that they can use to trade with.

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

Basics of Indices Technical Analysis

Candlestick Charts

For traders the basic technical analysis tool that they use is the chart. There are three types of charts: line charts, bar stock indices charts and candlestick charts. The type of chart most commonly used by traders is the candle chart. This is because the candlestick chart has a visually appealing format that clearly represents the movement of market prices, by displaying different colors for different movements; that blue color when prices close higher than they opened or red colour that represents when prices close lower than 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 the price will be drawn with what is referred to as a shadow, the shadow is a thin poking line that is drawn above the candlestick & it looks similar to the wick of a real stick. There is also another shadow drawn below the candlesticks & this one represents the lowest point of the market price.

The information drawn by the candlesticks is known as OHCL - which represents Opening trading price, High, Low and 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 candles: He is said to have made over 100 consecutive winning trades.

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

1.Long and short Candles

2.Spinning Tops and Doji Candles

3.Hammer Candle Pattern & Hanging Man Stock Indices Candle Pattern

4.Inverted Hammer Candle Pattern & Shooting Star Stock Indices Candle Pattern

5.Piercing Line Indices Candlestick Pattern & Dark Cloud Cover Stock Indices Candle Pattern

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

Support & Resistance Levels

Some traders also refer to these levels as support & resistance lines. The concepts of support & resistance levels refers to trading price zones where it's difficult for the 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 prevents the price of an asset from getting pushed downwards. Support levels are hence considered as the floor because these trading price levels prevent the market from moving prices downwards past a certain point.

Resistance

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

Therefore, these levels might be used by trader to determine where to open trade positions at the points where there is a high risk to reward ratio. For example a trader may open a buy trade at a support zone and place a stoploss order a couple of pips below that level. The trader buys at this point because they perceive the market price to be cheap. A trader may open a sell trade 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 therefore the price is likely to start moving down soon rather than continue to move upwards.

Trend Lines

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

Sometimes support and resistances are formed diagonally in a similar way like a staircase. 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 that connects two or more trading price points & then extends into the future to act as line of support or resistance.

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

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

If a indices trendline forms in a certain direction then trading price usually move in that direction for a period of time 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 price is heading down then a line is formed that also moves down. This line is called a downward indices trendline.

Moving Averages Indicator

MAs are also used in indices to determine the general direction of the market. MAs is a indices trend following indicators which is used to explain the direction of the market.

Most common method of determine direction of the 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 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 two moving averages also will be moving down. 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 the price movement. This crossover signal is used by stock traders to determine when to open 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 determine when to close a trade & take profit after there's a cross-over in opposite trend direction.

Bollinger Band Indicator

Bollinger Band is a very popular stock indices indicator, it is also a indices trend following indicator & it is used to show the general trend of the market. The Bollinger band is made up of three lines, these are:

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

·Upper Band - illustrates upper limit of price

·Lower Band - shows lower limit of price

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

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

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

Indices Fib Retracement Levels

Fibonacci retracement levels are popularly used to determine the levels where trading price retracements are likely to go up to. Traders use these retracement levels to determine where to open trades after a indices price pullback.

Fibonacci retracement levels are covered in the learn indices lessons section of this site under the trading analysis topics. Trader can learn how to use the Fibonacci retracement levels, which levels are oftenly used to open trades & how to draw these retracement levels using Fibonacci retracement technical 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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