What is a Technical Indicator?

Technical indicators, industry terms, in the process of technical analysis of the stock market, generally refers to all data sets of stock prices calculated by mathematical formulas.

Technical index

Technical indicators, industry terms, in the process of technical analysis of the stock market, generally refers to all data sets of stock prices calculated by mathematical formulas.

Chinese name

Technical index

Foreign name

technical analysis indicators

Types of

Industry term

Use

WMS is the fastest K, second is the slowest

Calculation formula

N-day RSV = (Ct-Ln) / (Hn-Ln) × 100

Classification

Trend

BIAS deviation

Deviation rate performance

Changes in technical indicators and sent-and-sell signals are the values reflected in the indicators by the market and also the prior changes in the market. If the market does not change, the indicator will not display and signal. If a buy signal is issued at this moment, and a sell signal may be issued at the next moment, both possibilities exist. Therefore, the changes in technical indicators and the buy and sell signals are still a

MTM principle and calculation

MTM is the difference M between the closing price V of the current day and the closing price VN of the N days before, connecting each M value calculated in turn, that is, the calculation formula of the MTM line MTM is:

M = VVN

Here, the difference between the closing price parameters of two fixed time intervals includes the concept of speed change. If V> VN continues, and the difference M becomes larger, it means that the market potential is accelerating. If V <VN continues, and the difference | M | becomes larger, it means the market potential. Is accelerating downward. Similarly, the process of deceleration and direction reversal can be seen from the change of M value. This is the reason that the momentum indicator curve can measure the direction and speed of the market movement.

Application of MTM

1. Generally take N = 10.

2. Generally speaking, the MTM crosses the 0 axis as a buy signal, and the MTM crosses the 0 axis as a sell signal. But if M = 0, then V = VN, then during the Nth day, the market may shift, or may rise and then return, or may fall and then rise. Therefore, buy and sell signals near the O-axis need to be handled carefully, including:

Adjust the up and down of the MTM in the vicinity of the 0 axis can be ignored;

The upward trend reverses, and the MTM crosses the 0 axis as a sell signal;

The downward trend is reversed, and the MTM crosses the 0 axis as a buy signal;

During the rise, the MTM crossing the 0 axis may be a false breakthrough, and the subsequent rise after the return is over;

During the decline, the MTM crosses the O-axis may be a false breakthrough, and then it declines after the rebound.

It can be seen that MTM operation should have other indicators to help identify trends.

3. Usually when the market situation completes rapid development and begins to decelerate (but has not reached the top or bottom), the MTM indicator has taken the lead to turn down or up. Therefore, the MTM indicator is ahead of price changes. Experience shows that the lead time is about 3 days. In this way, the inflection point of the MTM is an early warning sign of the price inflection point.