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COOLORANGEFREEZE
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What are the basic definitions for the following terms when applied to charting -

1.) MACD

2.) SLOW STO %K

3.) EMA

Any accurate, yet basic, definition will do. Thanks for your help!


Posts: 442 | Registered: Oct 2003  |  IP: Logged | Report this post to a Moderator
COOLORANGEFREEZE
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I found a great resource at investopedia.com

Anyone who has terms to define or more learning to do then I suggest this as a valuable resource.

1.)MACD (Moving Average Convergence
Divergence) - A trend following momentum indicator that shows the relationship between two moving averages of prices. To calculate the MACD subtract the 26 day EMA from a 12 day EMA. A 9 day dotted EMA of the MACD called the signal line is then plotted on top of the MACD.

There are 3 common methods to interpret the MACD:

A.) Crossovers - When the MACD falls below the signal line it is a signal to sell. Vice versa when the MACD rises above the signal line.

B.) Divergence - When the security diverges from the MACD it signals the end of the current trend.

C.) Overbought/Oversold - When the MACD rises dramatically (shorter moving avg. pulling away from longer term moving avg.) it is a signal the security is overbought and will soon return to normal levels.

2.) SLOW STO %K (couldn't find this so I have a different term to define)
STOCHASTIC OSCILLATOR - compares where a security's price closed relative to its price range over a given time period.

The theory behind this is that, in an upwardly trending market, prices tend to close near their high. Whereas, during a downward trending market, prices tend to close near their low.

3.) EMA (Exponential Moving Average) - A type of moving avg. that is similar to a Simple Moving Avg. (SMA), except that more weight is given to the latest data.

AKA an Exponentially Weighted Moving Avg., this type of moving avg. reacts faster to recent price changes than a Simple Moving Avg..

Now if I can put these to good use. Can anyone recommend their favorite basic indicators to watch? What do you look for in your entry/exit strategies? I know everyone has their own personal tastes as to what they look for...


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