1. Usage of Various Technical Analysis Tools and Software for Stock :

Investment in stock is riskier and thus a need of complete understanding about the stock trading is a must for every investor. Nowadays due to technological innovations, trading in stock and analysing the stocks are very easy. Investors and companies use technical analysis for stocks and bonds. Technical analysis is a science of predicting the future price of stock from its historical price data.

The technical analysts uses various tools and softwares for analysing and recommending a good stock to his clients and companies. Widely used technical tools are 200 Day Moving Averages, Relative Strength Index, Moving Average Convergence Divergence (MACD), Candle Stick Price chart and Fibonacci Retracement.

• One of the widely used tools for stock analysis is 200 days Moving Average tool. It is a simple method to use and the analyst just plot a 200 days moving average of stock on the price chart and then calculate the fall or rise of stock.
• Relative strength index is used to compare the magnitude of recent gains to recent losses. RSI has spotted a scale of 0-100, if it is above 70, the stock is overbought and the investor can sell it. If it is below 30, the stock is oversold and the investor can purchase it.
• MACD is an important tool used by many technical analysts. The calculations are automated and the investor can just select MACD and plot it on chart. The movement of lines indicates whether to buy stock or to sell stock.
• Fibonacci Retracement is based on assumptions that the market retraces by a predictable percentage like 38.2%, 50% and 61.8%. When the market retraces to the given percentages, it shows whether to buy or sell stock depending on trend in market.

The stock softwares helps the technical eperts with simulation of real time stock market, backtesting, designing stock trading, accurate information about stocks and avoid making improper decision on stocks. The important technical softwares used for stock analysis are MetaStock, Worden TC2000, Tradestation, eSignal.

• MetaStock gives all tools for analysing stock, real time news and data of stock and daily chart of stocks. It is mainly designed for real time traders. It is a powerful charting software which pulls end-of-day data from exchanges all over the world.
• Worden TC2000 provides technical analysis on software for U.S and Canadian stocks and bonds. It gives charts, watchlists, news, scanning, alerts, instant messages and sorting features. But there are no automated trading tools.
• TradeStation presents stock trading strategy-testing tools for unlimited custom trading strategy, papertrading, backtesting and automatic trade execution on rules of custom buy and sell.
• eSignal is a software with more features of tools and techniques. It affords charting, trading, implements options, forex, futures and stock trading. But it is an expensive software program and complex.

2. Reason for selection of particular stock to buy/ sell :

Selection of stocks are the foremost step of investment in stocks. An investor should need a complete analysis of various stocks in the market, stock price, return on stock, dividend earned through stock and volatility of stocks. The investor will select the stock which gives higher return and which is purchased more by public.

The volume of stock is also an important feature to consider for selection of stock. A stock will have high volatility if it has the volume of at least 500,000 shares. When the index rises, the stocks will also rise.

Identification of trends of stock in the market is very important. But it is very difficult to spot a trend because the market should not moves on a straight line. The price and trend of stock will change day by day. Thus the investor should be aware of market trends. Normally, a higher highs and higher lows indicates uptrends and lower highs and lower lows indicates downtrend.

Plotting of strategies like growth investors strategy, value investors strategy, etc., helps the investors to predict the future and generating health of company using curent stock value. Screening the value of stocks helps in evaluating average dividend yield, price to earnings ratio and price belows the company book value.

Consideration of technicals like screen stocks, chart scanning and trade setup helps to sort the stocks, narrowing the list by scanning the chart for entry in the market and examining the charts to choose the best one.

Finally, usage of various technical tools and software by technical experts helps the investor to understand more about the stock.

To conclude, analysing the volume, volatility, trends, strategy, technicals, software and tools helps in identification of a strong stock to purchase or sell.