Technical Analysis 2

Question 1

Trend Indicators

Answer 1

Measure strenght and direction of a trend. (Moving Averages, Parabolic SAR, MACD)

Question 2

Momentum Indicators

Answer 2

Also called Oscillators. They measure the relative strenght of recent price moves within 1 and 100. Shows overbought and oversold levels. (RSI, Stochastic, Momentum Oscillator)

Question 3

Volume Indicators

Answer 3

Measure the strenght of a price move by using the information of trading volume. (On Balance Volume, Chaikin Oscillator)

Question 4

Volatility Indicators

Answer 4

Measure the rate of price changes regardless of their direction. They rise when the markets are fast and fall when markets are slow. (Bollinger Bands, Average True Range ATR)

Question 5

Another RSI Strategy is…

Answer 5

…to use the 50% line as overbought and oversold level.

Question 6

Use Stochastic Slow Indicator together with the RSI…

Answer 6

…to see oversold levels. It´s oversold when the Stochastic Slow is below 20 and the RSI below the 50 line.

Question 7

With the Stochastic Slow Indicator, the RSI, and the MACD, sell when…

Answer 7

…The RSI is above 50, the Stochastic Slow above 80, and the MACD crossing up.

Question 8

PDT

Answer 8

Pattern Day Trader

Traders who make four or more day trades in their margin account over a five business day period (and trades make up more than 6% of account activity).

Question 9

PDT Rule

Answer 9

Day traders need at least $25.000 in their margin account if they want to day trade more than 3 times a week.

Question 10

Round Trip

Answer 10

A “round trip” simply means opening and closing a security position. Whether you buy or sell to open, when you close the position, you’ve completed a round trip. If you did it within a single trading day, you’ve made a day trade.

Question 11

CFDs

Answer 11

Contract For Difference:

contract that enables two parties to enter into an agreement to trade on financial instruments based on the price difference between the entry prices and closing prices.

Question 12

(CFDs) If the closing trade price is higher than the opening price…

Answer 12

…then the seller will pay the buyer the difference.

Question 13

(CFDs) If the current asset price is lower at the exit price than the value at the contract’s opening

Answer 13

…then the seller, rather than the buyer, will benefit from the difference.