Day trading involves study of charts and taking decisions based on patterns and indicators. A particular decision either to short sell or to buy a stock at a particular time in stock market should be taken after a careful study of charts patterns and indicators.
These patterns on the charts and technical indicators can give you information that can help to predict future movement of the stock to make money in stock market doing intraday trading.
We can categories these technical indicators in to four different types viz
- Trend Indicator : This indicator indicates the direction the stock in nse market i.e stock is moving up or down.
- Momentum Indicator : This indicator will guide you how strong the current trend is and also if a trend reversal is going to occur or not after some time.
- Volume Indicator : volume of the trade gives an indication of how strong the move. Any dip in the volume may be a sign of trend reversal and vice versa.
- Volatility Indicator : Volatility Indicator is a very important part of the market., This indicator shows how the price is changing in a given period.
Best Technical Indicator for Day Trading – RSI Indicator
As per our 15 years of experience in share market and knowledge we think that the relative strength index (RSI), is one of the most popular and the best technical indicators in Stock Market that help day traders to make money. Day trader can really make money in 70-80% of the trades and avoid losses, if they follows only RSI indicator. They should check the RSI Figures and then put there buy or short sell orders in day trading in nse share market.
The relative strength index (RSI) is a momentum indicator that measures the magnitude of recent changes in the stock prices of a particular stock to evaluate whether stock is overbought or it is in oversold zone. RSI is computed on the basis of the speed and direction of a price movement either upward or downward of a particular stock in NSE share market.
The RSI is displayed as an oscillator that has a reading from 0 to 100. The indicator was originally developed by J. Welles Wilder Jr.in his book.
RSI Indicator varies between zero and 100, it gives overbought signal when it is above 70 and shows the stock is oversold when it is below 30.
If RSI is above 70, the stock is overbought so we can predict that the there is an chance that the stock will move down, so trader can short sell the stock at those levels and buy later to make intraday gains. Also if RSI is below 30, shows that stock has come in oversold levels, and you can buy the stock predicting a uptrend in the stock at that level.
The RSI is one of the most popular and widely used technical indicators that provides us with many ways to generate buy and sell signals in the nse stock market. If use with a any other indicator or combination of indicators, you as a day trader will surely be able to predict accurate movement and make lot of money in stock market with ease.
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