One of the tools that small and medium investors have to carry out their operations is materialized through oscillators. These are very important elements for analyzing equity values, and they can be used to formalize purchases and sales with greater guarantees of success. To the point that they allow better adjustment of the prices of these movements in the financial markets. Although they require a certain learning for their better understanding.
The oscillators in the stock market are one of the most relevant tools in technical analysis and that they achieve that we have the entry and exit prices in the analyzed values. Of course, the number of oscillators is very wide and therefore we are going to make a selection of them. That is to say, some of the most common in the operations of small and medium investors with more experience in this kind of movements in the equity markets.
To such an extent they are important and decisive that we can say without fear of being wrong that oscillators and indicators are currently configured as one of the main helps that the average investor has to plan their stock market strategy when buying and selling stocks. . Not surprisingly, you can measure the level of overbought or oversold that a security or index may have at any given time. Like the trend of the same, that is to say if it is in a bullish, bearish or also lateral process.
Oscillators: the RSI
Of all, this may be one of the most followed by small and medium investors. The RSI or relative strength indicator (Relative Strength Index, in English) is a very important oscillator that reveals the strength of the price by comparing the individual movements up or down in successive closing prices. In practice it means that it can give the bullish, bearish or neutral guidelines of a security or index.
It is a decisive instrument when you open or close positions in the equity markets. Because its reliability is very high and above the other oscillators. Not in advanced is framed within what are advanced oscillators. That is, they reflect the real state of a stock in the configuration of its prices and it is a tool that you must use to make your investments in the stock market. In particular, because it offers you greater protection against possible incidents in the price.
Stochastic, a bit more complex
El PCS or stochastic It is another indicator in technical analysis and it also tries to detect the trend of a stock or stock index. Its main characteristic is that it guesses the existing divergence between the closing price of the market closing. It is very important to see the difference between the highest and lowest prices in the stock price. Although its greatest incidence lies in the fact that it is one of the best tools for trading in the stock market in highly volatile scenarios. That is, with wide differences between their maximum and minimum prices.
While on the other hand, another of the contributions of this important oscillator is the one that refers to very relevant to take positions in a listed company. It makes us position ourselves in these financial assets with greater security guarantees and eliminating risk in operations. Although it is true that it is one of the most complex oscillators to detect since it is a price to have some knowledge about its development and configuration. Where not all small and medium investors can contribute at this time.
Momentun for fast operations
Of course, the Moment is another indicator that compares closings and that indicates whether it is time to make purchases or sales. Because indeed, it detects with great reliability is status or trend you are in at that moment. Its name is a declaration of intent and does not require further explanation to verify its interpretation in the equity markets. It is very useful for operations in a very short space of time and in any case not for the medium and long terms of permanence.
On the other hand, the moment is an oscillator that has a total reliability and that in most cases is close to 100%. It has practically no fault in its interpretation and it is also very easy to understand, even for small and medium investors with less experience in this class of tools in the equity markets. While on the other hand, we can also say that it is very useful to analyze the buying or selling positions. Because what it is telling us is the moment in which the stock or stock index is. Nothing more and nothing less. Since it is more than relevant information to formalize purchases and sales in the stock markets.
MACD: convergence and divergence
MACD is another of the indicators par excellence of technical analysis. Among other reasons because it tries to analyze the convergence and moving average divergence. It is highly advisable to carry it out in trends, to set purchases and sales, respectively. It also detects divergences adequately when there is a slightly significant change in trend that can lead to a change in strategy in the investment made. On the other hand, or we can forget that it is one of the oscillators most used by financial markets analysts.
Its importance lies in the fact that it can be used for cycle changes in equity markets. They are very effective in their analysis and also their level of error is very well controlled. Although, like the previous ones, it requires a knowledge of its notions and especially in analyzing its development. In order to avoid some very unwanted situation on the part of small and medium investors. Because in this case if certain interferences can be generated in its appearance and subsequent development.
SAR: reflects a position
If you want to have quite useful information when investing in the stock market, do not hesitate to adopt other of the most important indicators for the equity markets such as the SAR. It is another trading tool that establishes the purchase and sale prices based on time and price. This oscillator is really useful to carry out in a very well defined trend, whatever it was. Good in bullish or bearish and in some cases even in the movements of a certain laterality. Because you cannot forget in any way that this equity indicator defines the bullish, bearish or neutral position of a security at the time of its analysis.
On the contrary, it is another of the most complex instruments to detect and that requires a few strong prior knowledge for its correct application. Not surprisingly, there is the possibility that you can confuse it with some of the previously exposed in this article. In addition, you need very powerful graphics where you can visualize your buy and sell lines. Something that not all small and medium investors can contribute at this time. Because they are much more complex oscillators than the rest and this is their biggest problem for their correct application.
Advantages in its application
The use of these oscillators so relevant in the equity markets is given by some benefits that you can obtain in your operations in the equity markets. For example, through the following actions that we expose you below:
- Makes you perform operations with greater fullfilment of security requirements on the results that you will obtain in each one of the investments.
- They are mechanisms of protección so that you do not lose money in operations driven in the equity markets.
- Lets adjust better prices, both in purchases and sales, with operations on the stock market much more optimized than before.
- They are indicators that generally offer a high reliability and that they deserve all the respect to be used with a certain frequency.
- They constitute the basis of the true Insights technical and from this point of view they will rarely disappoint you in terms of the results you will obtain in your operations on the stock market.
- It is a tool, although somewhat more complex than the others, but that can help you earn more money in each of the operations on the stock market.
- You must provide prior knowledge so that the results of the movements are completely satisfactory for your interests as a small and medium investor that you are.
- You can detect a trend, whatever it was, more easily than through other indicators in the equity markets.
- And finally, note that the ultimate responsibility will always correspond to your own person, not to anyone else. Because at the end of the day we are talking about operations on the stock market.