Swing traders use technical analysis to find stocks that have short-term price momentum, and they are not interested in the intrinsic value of stocks. They focus more on a stock’s price trends and patterns and typically don’t look at the fundamental factors affecting stocks. Swing traders differ from day traders in that they hold a certain stock for a specific period of time, typically a few days to a few weeks. Day traders almost always close out their trades by the end of the trading day.

In today’s article we will take a look at some of the technical indicators that swing traders will use such as the moving average, stochastics, and the relative strength index (RSI).

The moving average is probably one of the most often used indicators and is used with other indicators as well. There are different types of moving averages such as the simple moving average, the exponential moving average, and the moving average crossover. The purpose of this indicator is to show the average value of a security’s price over a determined period of time. It tracks the trend of a security by smoothing out daily price fluctuations or the market “noise” that confuses interpretation of the markets.

Stochastics indicates the market’s momentum through determining the relative position of its closing prices within the high-low range of a specific number of days. The assumption is that when a stock is rising it tends to close near the high. Conversely, when a stock is falling it tends to close near its low. Stochastics is a momentum oscillator that can warn an investor of strengths or weaknesses in the stock market.

The RSI (relative strength indicator) helps to identify potential overbought and oversold positions in the market as well as the trend. It is expressed as a percentage and it is the measure of price trends that indicate how a stock is performing in comparison to other stocks in the same industry. This technical indicator is a momentum oscillator as well.

Please also read about Japanese Candlesticks which is a trading strategy used by some of the world’s most successful traders along with other forms of technical analysis . It is the fastest way for new investors to quickly and accurately read stock charts when trading stock . Once you are comfortable with the major candlestick signals, expand your expertise by learning the secondary Candlestick Patterns. Combine these with your favorite technical indicators, such as the moving average, and you have the perfect trading arsenal for evaluating stocks, currencies, commodities, or exchange traded funds.