Market Overview

Making The Most Of Essential Trading Tools

Making The Most Of Essential Trading Tools

If there is one thing that I like to get across to those watching my trading recaps or hot stocks videos is that there’s no single way to approach the market. I like to give people strategies and ways of thinking about the market, but every trader finds his or her own approach that prioritizes certain pieces of information over others. I’ve said before that one of the best parts of working with other traders is hearing about someone in the Warrior Trading chat who was able to make a trade that I couldn’t.

That’s why I pulled together the list below of technical signals, data sources and other research tools that are essential to many trading strategies. These are great resources to explore, especially if you’re unfamiliar with any of them.

Moving Averages

A stock’s moving average is among the most fundamental ways of analyzing trend over a given time span. Getting a simple moving average involves averaging sets of closing prices over a given time and connecting those segments to plot a smoother chart, evening out the rough edges and can illustrating approximate entry and exit levels. Obviously a greater time span will have a smoother chart, but traders should play around with time frames to get a sense of which equities can be reliably plotted alongside its moving average.

In addition to simple moving average, there is also the exponential moving average (EMA), which places greater weight on more recent price activity and is often incorporated into other pieces of analysis.


MACD, or Moving Average Convergence and Divergence, is a more involved measure of trend, and is used by some traders to anticipate changes in a stock’s momentum. Most charting software will include a visual MACD calculation, which is made up of a MACD line—representing the difference between the 26-day and 12-day exponential moving averages—and a signal line—representing the stock’s 9-day EMA.

Traders look to the crossover of these lines to indicate a change in momentum. If the MACD line overtakes the signal line, that’s seen as a bullish signal, while the opposite is a bearish one. Strong deviation of the MACD line from the trend line generally indicates a change in short term trend.

Off-hours Data

Among the first “ah-ha” moment a lot of new traders have when they first get into market analysis is how much information they can get from after-hours and premarket trading. Both the overnight futures markets and after-hours/premarket equities sessions, can provide a signal for the regular session.

Since volume drops off significantly for off-hours equity trading, many day traders look to activity in futures markets for a sense of how the next day’s regular session might play out. Since their value is (mostly) dictated by the disparity between the actual price of the commodity or stock and the time left before the contract expires, futures contracts provide a sense of leading sentiment about how a portion of the market might react once trading begins.

Posted-In: Warrior TradingEducation General


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