A number of indicators called oscillators assess how far away price is from average. At the more extreme levels the market is said to be overbought (when above the average price) or oversold (when below the average price).

- The fastest moving average chart line moves above the second fastest, and both above the slowest.

- The begining of a downtrend can be seen as: the fastest moving average chartline moves below the second fastest, and both below the slowest.

Getting a handle on the candles

Candlestick charts originated in Japan and show price data in a special way. The price movement between the open and the close is shown as a box (called the "real body") and different colours are used for the real body depending on whether the close is higher or lower than the open. Often green is used if it's higher and red if it's lower or sometimes the colours used are blue for up and red for down.

What is a break out?

You might have heard traders referring to break outs but what does it all mean? A break out occurs when price rises above a level which has previously stopped moves upwards, or falls below a level which has previously stopped moves downwards. Once getting through the level price will often move strongly away from it. But sometimes a failed break out occurs. Price break outs beyond a level, then turns round and retreats back within the level.

Some traders like to put moving averages on to their charts. Moving averages can help the trader see the wood from the trees, bringing into focus the broad trend of prices and cutting out the distraction of all the usual fluctuations around the trend. There are two main types of moving average, simple and exponential. Exponential ones apply a greater weighting to more recent prices, and therefore reflect changes in direction more quickly, but many traders prefer to stick with simple ones.

Many traders like to trade trends, and there are many definitions of a trend. One of the oldest and simplest is this: an uptrend is a series of higher highs and higher lows, a downtrend is a series of lower highs and lower lows.

When prices are not trending they often fluctuate within a faily clear range. When a move out of a range takes place ( a break out) this attracts a lot of attention. Some traders take positions after a break out, hoping this is a start of a new trend. If prices then turn round and fall back into the previous range (a false break out) then the break out traders tend to exit their trades in a hurry and this can lead to a strong move in the other direction.

Some analysts like to put indicators on to their charts to help them interpret the price action. One popular indicator that is available on the Tradefair Spreads platform is called Momentum. This compares each period's price with an earlier price - the amount of time between those two periods is defined by the user. The indicator helps examine if a trend is gathering pace or slowing down. In particular it helps to spot the end of downtrends. Look for price to make a new low, but for the indicator to make a higher low. The technical term for this is divergence (the action of the indicator is divergent from price action).

The information in this email is for educational purposes only, it does not constitute advice and should not be construed as solicitations of any order to buy or sell. Past results are not necessarily indicative of future results.

You can trade US indices on the Tradefair Spreads platform.The most famous of these is the Dow Jones Industrial Average. It is often referred to just as "Wall Street", and that is what it is called on the platform.

A bar chart shows the range between the high and the low for each period as a vertical line, with two very small horizontal lines attached to it: on the left the opening price, and on the right the closing price.

Many analysts like to draw trend lines on price charts. A trend line is a sloping line drawn between two or more prominent points on a chart. It is used to identify whether a trend is still in tact or has been broken. Some rely solely on trend analysis to make their trading decisions.

Viele erfahrene Trader bevorzugen es mehrere Märkte gleichzeitig zu beobachten, denn die Ereignisse an einen Markt können die Ereignisse an einem anderen Markt beeinflussen.