MACD, Parabolic SAR, and Stochastic

Technical Analysis is the use of mathematical indicators to make trading decisions. These indicators can range from simple formulae such as the Simple Moving Average, to more complicated formulae such as the Directional Movement Index. Technical indicators are usually displayed on a graphical chart (such as the example chart above showing the Directional Movement Index), so that traders can watch their markets and make their trading decisions. However, as technical indicators are purely mathmatical, they can be written into computer programs and traded automatically, in which case there may not be a graphical chart.

Technical analysis has been in use by traders for over 200 years (graphical charts were used by the original rice traders in Japan), and many of the technical indicators that we use today were created during this time. Despite their age, these same indicators are still well suited to today's electronic markets, because the underlying principles of supply and demand have not changed.

The technical indicators section of the day trading site includes many popular technical indicators. The Moving Average Convergence Divergence (MACD), Parabolic Stop and Reverse (Parabolic SAR), and the Stochastic Oscillator, have recently been added, along with their descriptions, their full mathmatical formulae (in case you want to program your own automated trading system), and their basic use in trading.