I was reading Alexander Elder’s book “Entries and Exit” and he mentioned using 5 indicators to help him determine trade actions (there is no need to use more than 5). They are namely – moving averages, channels, MACH-Histogram, Force index (invented by him), and momentum indicator such as Stochastic.

Here are a few indicators which I think are relatively easy to use and worth re-visting. I am a believer of using technical analysis to buy fundamentally good stocks. As a reminder to myself when choosing indicators, I have briefly summarized their key features below and if you want to read the full details from calculations to usage please click on the reference links.

  • Elder Force Index = Change in price x volume

– Measure of buying and selling pressure.  Only indicator which factors in volume.
Reference: http://stockcharts.com/school/doku.php?id=chart_school:technical_indicators:force_index