Home
>
Stocks & Mutual Fund
>
What is the Most Important Indicator of All?

What is the Most Important Indicator of All?

Most stock market traders have a favorite technical indicator.

The one that they have the most confidence in. The one that, from experience, they trust the most. Or the one that they always look at first.

For some it is the RSI. Others like the Stochastic or the MACD . Or one of the literally hundreds of other indicators that are available.

Well, I love the MACD. And the Stochastic is also a favorite.

But there is one indicator that I refer to more often than any other. However, before I tell you what it is, it is important that this discussion is placed in context.

I always stress with the traders that I mentor that the most important part of your analysis is price action.

By this I mean that the very first thing you should look at is the shape of the stock's chart. And any patterns that you may be able to identify.

In particular, look for trends and consolidation. Candlestick reversal patterns and support and resistance levels. And be particularly aware of all time or 52-week highs or lows.

Also, be on the lookout for double tops and bottoms and triangles and head and shoulder patterns.

Because it is only in the context of the basic price action that you can make your trading decisions. And it is only from this understanding that you should begin to apply your technical indicators.

So, establish the context for your further analysis. Indeed, use this first process as a screening device.

Because, unless the chart immediately "speaks" to you, you should eliminate the stock from any further review.

What I mean by this is that unless there is a clear reversal pattern or potential for a breakout, move on. Don't waste time analyzing charts that have no likelihood of immediate movement.

And one of the best patterns for short-term trading is the channel. Always keep an eye out for these and when you find one, give serious consideration to trading them. Now, let's get back to our earlier discussion. What is the most important indicator?

Well, whilst this might surprise some of you, I believe it is volume.

You see volume is an indication of the strength of price action. A market needs high volume or increasing volume to sustain a movement in price.

So we want to see volume moving in the direction of the price. Increasing both in an uptrend and also a downtrend.

But realize that it takes more effort to push prices higher than it does to cause them to drop. So increasing volume is more significant in an uptrend than a downtrend.

If volume is diverging from the trend [going down instead of up] then we would normally not carry out any further analysis. Because the lack of volume means that there is a lower probability of price movement in the direction of the current trend.

Note however, that divergence can be an indication that a trend is about to end. So this can be an early sign of a reversal.

Another important aspect to volume that is often overlooked is in regard to retracements. Because the volume during retracements gives us a significant indication of the strength of the overall trend.

A strong uptrend should have higher volume on the upward legs of the trend and lower volume on the downward or corrective legs. Similarly in a downtrend.

Volume is best plotted below your chart as a histogram, or series of vertical lines.

And it helps to add a moving average line over the histogram to smooth the volume readings. I use a 3 day MA but you can experiment to see what works best for you.

But most importantly, always consider volume before entering a trade.

David Chandler For free mini-course on stock and options trading click the following link: http://www.stockmarketgenie.com http://www.stockmarketgenie.com Ordinary People Making Extraordinary Profits! The above comments are offered for educational purposes only. We are not providing you with financial advice. We are simply sharing with you what has and hasn't worked for us personally. If you wish to trade or invest in the stock market you should obtain advice from a registered licensed advisor.

quick home cleaning Bannockburn ...

In The News:

A fake Claude AI download scam uses Google ads and Bing redirects to trick Mac users into pasting a hidden malicious command in their Terminal.

Ahold Delhaize's cybersecurity incident knocked online ordering and digital coupons offline at Stop & Shop, Food Lion, Hannaford and Giant Food stores.

The Fox News AI Newsletter covers the latest artificial intelligence technology advancements, including the challenges and opportunities AI presents now and for the future.

Amazon's About You feature includes personality details from your shopping history, and some shoppers are finding hilariously awkward results.

Identity theft recovery starts with securing bank accounts, freezing credit and enabling two-factor authentication within the first 24 hours.

Apple's $299 HomeView smart display uses facial recognition to personalize screens for up to six household members and show live security camera feeds.

Domonique DuBose spotted red flags when a man on Hinge with 85,000 followers and a blue checkmark claimed to be a San Francisco 49ers player.

Your phone's location data can expose visits to doctors, pharmacies and places of worship. The FTC took action against data brokers selling this data.

Hackers targeted Danfoss refrigerator controls across French supermarkets, forcing chains like Carrefour and Monoprix to discard massive food stocks.

iOS 27 finally lets iPhone Shared Albums store photos and videos at full resolution in iCloud, but new items count toward the owner's storage.

A fake Facebook Marketplace text scam uses your real name as the seller to trick you into replying, and Malwarebytes warns even one response helps.

The Pentagon data breach exposed 2.76 million Social Security numbers and military records, raising long-term identity theft concerns for veterans.

Kodiak AI plans to haul IKEA freight on Texas highways with no one in the cab, raising urgent cybersecurity and safety questions for drivers.

Apple Intelligence in iOS 27 adds Extend and Reframe tools to Photos, letting iPhones generate new background areas beyond your original borders.

Microsoft's X account was hijacked to promote a crypto pump-and-dump scheme, exposing its more than 13 million followers to a scam campaign.

Scammers can combine your name, phone number and address with data breach details to attempt SIM swaps, phishing and even identity theft schemes.

ChatGPT Work, Meta Muse and Gemini Spark can monitor flight prices, sort your email inbox and track important deadlines, but savvy users start small.

iPhone, Samsung Galaxy and Google Pixel each hide a built-in tool that turns a video frame into a separate photo without any screenshot needed.

Operation KillSwitch dismantled KillSec's ransomware infrastructure, but investigators say a 16-year-old allegedly ran the entire cybercrime operation.

The Fox News Artificial Intelligence newsletter covers where voters will decide on AI data center ballot measures and Jeff Bezos' tech vision.

Apple's Impersonation Risk Detection in iOS 27 can flag suspicious activity inside apps, but the setting is off by default and must be enabled.

Federal Election Commission records can expose your name, address, employer and donation history once contributions exceed the $200 threshold.

Cybersecurity expert Morgan Wright says human skepticism remains the strongest defense against AI-driven phishing scams and voice cloning fraud schemes.

iPhone, Google Pixel and Samsung Galaxy each handle security updates differently, and one screen saying "up to date" may not tell the whole story.

Deborah Del Mastro heard what sounded like her daughter's terrified voice on the phone, launching a five-hour virtual kidnapping scam ordeal.

What is the Most Important Indicator of All?

Stocks & Mutual Fund