Technical Analysis For Stock Traders
Mar0
Technical analysis of the stock market, or any other market such as Forex, Bonds, Futures, is how most traders and investors make their trading decisions. This is as opposed to fundamental analysis which most people more agree is pretty much done as a way of making trading decisions, unless of course you are Warren Buffet!.
You only have to think back to recent stock market scams like Enron to know that it is almost impossible for the average, and even very sophisticated fund manager or hedge fund trader to really know what the real financial state of a company is.
Just by reading the balance sheet and other quaterly reports they release gives you a very poor insight into the real health of the company. Whereas the technical analysis charts of the company tend to give the real picture of what the market thinks of the value of the company. In the case of Enron even simple technical analysis told you to SELL when the stock was in the $80-90 range, this is why technical analysis of stocks is so popular.
So what is the secret to technical analysis?, I’m about to tell you, here are my golden rules:
* Only use 3-5 simple technical analysis indicators
* Make sure that you understand how the indicators that you have selected work, what the parameter settings are and in what market conditions they are effective
* After selecting your indicators and parameter settings don’t mess with them.
The real secret to technical analysis is to get VERY familiar with your choosen indicators, and really this can only be done by watching and studying the market, so that you get to the point that you TRUST them.
The fact is that in any market, for each bar period, there are only 5 pieces of information, the open, close, high, low and volume, yet there are now hundreds of indicators. Most of these indicators are displaying much the same information and so are redundant.
For the record my set of indicators are:
* 4 Simple Moving Averages
* Bollinger Bands
* MACD
* Stochastics
But the way I use them is quite special, to learn more about how to become an expert at technical analysis visit:
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Technical Analysis Basics
Oct0
The Fundamental analysis uses the pressure of government policies and this drives the demand and supply up to the demands of an economy. In respect of this, no single idea, or set of ideas, influences the Forex fundamental analysis.
click: Forex Fundamental & Technical
If you think of it, part of Forex fundamental factors that are caught up in the determining of currency movements.
The reports are released by private or government organization detailing a nations performances economically. Two common factors are interest rates and international trade. Other factors are Durable goods orders, Consumer pricing Index (CPI), Purchasing Managers Index (PMI) and Producer Price Index (PPI).
When a nation interest rates rise, normally, the currency of that nation will beef up versus a different nations currency. Even so, climbing interest rates, for stock exchanges is bad news. A crucial factor, of course, is the International Trade. The balance of trade bespeaks the difference of exports and imports. A deficit is possibly an economic calamity for a countries currency and it’s politics. A deficit could come along when a country is exporting less than importing and implicates less money is coming in than is going out of that country.
Technical analysis correlates the motions and consequences of prevailing markets and currency outlooks are short-run. Data acquired on a trading day determines the interest in the markets and informs forex traders of a bull market.
The linchpin for maintaining a effective profit level is the selling and buying at the correct time and acknowledging when it is safe to enter or exit a position.The basic principals of Forex technical is support an resistance which are the guiding points for a chart to depict recurring ups and down pressure. During the resistance levels, buying and selling is the strategy by the veteran trader.
History frequently repeats itself and generally in the circumstance of price movements is a maxim of the technical analysis. The repetitive nature of price movements is oftentimes granted to the Forex market psychology. Traders have a response to related inputs of the market in special periods of time. The technical analysis applies formulas to break down Forex movements within the market and translates the trends too.
However, many of these charts have been and are still used today and they are still considered very applicable since they illustrate the price movement patterns frequently repeated. This should give you an idea of the Fundamental and Technical Analysis and should be useful to you when you are ready to begin your career as an investor. Just remember – do not invest any funds you do not have or can’t afford to invest.
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Protect your retirement account. Don’t forget to learn about mutual funds in retirement plans for 401k Plan advice, 401k asset allocation, 401k investment advice and a 401k investment strategy. It is important to your retirement account to be educated about 401k allocation and a 401k strategy
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Fundamental versus Technical Analysis Methods
Oct0
When you are interested in investing or index trading, one of many questions you must answer is whether you are interested in fundamental or technical analysis as your trading strategy. These are the two primary investing methodologies, and each system has its own characteristic advantages and disadvantages. The current state of the major markets, as well as your personal financial goals, will end up dictating what strategy you will choose.
Technical analysis is a system that tries to predict the price movements of a stock based solely on its previously observed patterns. In contrast, fundamental analysis focuses on the fundamentals, which are economic factors directly affecting the company, when making trading decisions.
A Closer Look at Fundamental Analysis
Fundamental analysis looks closely at a business, analyzing its cash flow statement, income statement, and other financial records to determine the intrinsic value for that particular company. When the stock price is below this supposed intrinsic value, the asset is considered a good buy. When the price is above the intrinsic value, the asset is considered a poor investment. This is a basic overview of how fundamental analysis works, as there are many other variables that the investor must take into account when looking at a company’s financial strength.
With fundamental analysis, investors must analyze the market and the company over the long term. Most fundamental analysts want many years’ worth of information from the companies they are considering investing with in order to make a decision. Also, the investments are considered long-term investments, as it takes a while for the company’s actual value in the market to reach its intrinsic value as stated by the analyst. If the economy is performing poorly, this can mean years of lost profits as the investor sits on an asset that is not generating any new value. The investor is assuming that the increase will come later and that the stock will eventually have the same value as the company’s intrinsic value.
Of the two types of investing strategies, the fundamental analysis trading strategy is the longest standing. This has been a tried and true investing method for years. Financial advisors have taught it as the most sound investing system for years. However, in order to succeed in long-term investing using fundamental analysis, you must have a thorough understanding of economics, the resources necessary to find the economic statistics about a particular company, and a sound company in which to invest. Many have lost money in recent years when companies that appeared to be sound on paper suddenly went bankrupt. In the long term, some losses like this may not affect an overall investment plan, but for many seeing them is discouraging in the short term. This has led to a growth in the popularity of technical analysis and index trading.
A Closer Look at Technical Analysis
Those who are interested in swing trading often take the technical analysis approach. This involves analyzing the stock alone and not focusing on the economic factors affecting the company. The technical analyst feels that it does not matter how much intrinsic value a particular company has if that value is not reflected in the stock market, because the value may never be felt by the investor. Index traders using a technical approach find everything they need to know in the price and volume movement of a security’s chart.
As such, the technical analysis approach is a more short-term investing style. The goal is not to buy an investment and hold on to it for a long time, but rather to buy an asset when it has a low price and sell it as soon as it has gained enough to make the trade worthwhile. These investors are constantly making trades back and forth, which is why this type of trading is often called swing trading. The charts they use are also short-term in scope. They may cover a few days or a few hours, depending on the type of trading being done, but they rarely cover several years. Active index traders try to determine the likely short term price action of a stock, in order to position themselves favorably for future market conditions.
Technical analysis often produces outsized returns in the short term, as compared to fundamental analysis methods. Traders using technical analysis need a reliable trading strategy in order to cement their gains over the long term.
Technical analysis has many merits in a slow economy. When markets as a whole hold steady or drop, there will always be days when a particular stock will do very well, and others when it will do very poorly. Index trading allows the investor to analyze past trends and predict when these spikes and drops will occur. This means that the investor can sell when the price jumps up and buy when the price goes down, creating a return even in a time when buy and hold investors are not seeing any. When trades are done well, nearly every movement in the market earns a return, even if it is just a small one. With buy and hold investing and fundamental analysis the investor is waiting on a company to perform well in order to see a return. If that company’s product or service stops selling well, the investor will lose significant amounts of money.
Which is Right For You~Which Trading System is Best for You}~{Which Method is For You}~Which Trading System is Best for You}?
It is up to you to look at your financial needs and goals and decide which method of trading you are going to use. Are you looking for a long-term investment option, or do you want a short-term option to get you through the current economic downturn without significant losses? Do you need to see an increase in your investment soon for an upcoming expense, or do you have the luxury of time to wait for future increases? Perhaps a balanced approach, with both types of investments in the same portfolio, will better serve both your long-term and short-term financial goals. Regardless, understanding both schools of thought and how they play out in an economic downturn is crucial to your investing success.
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The Secret To Technical Analysis
Jul0
Technical analysis of the stock market, or any other market such as Forex, Bonds, Futures, is how most traders and investors make their trading decisions. This is as opposed to fundamental analysis which most people more agree is pretty much done as a way of making trading decisions, unless of course you are Warren Buffet!.
You only have to think back to recent stock market scams like Enron to know that it is almost impossible for the average, and even very sophisticated fund manager or hedge fund trader to really know what the real financial state of a company is.
Just by reading the balance sheet and other quarterly reports they release gives you a very limited insight into the real health of the company. Whereas the technical analysis charts of the company tend to give the real picture of what the market thinks of the value of the company. In the case of Enron even simple technical analysis told you to SELL when the stock was in the $80-90 range, this is why technical analysis of stocks is so popular.
So what are the secrets to technical analysis?, I’m about to tell you, here are my golden rules:
* Only use 3-5 simple technical analysis indicators
* Make sure that you understand how the indicators that you have selected work, what the parameter settings are and in what market conditions they are effective
* After selecting your indicators and parameter settings don’t mess with them.
The real secret to technical analysis is to get VERY familiar with your choosen indicators, and really this can only be done by watching and studying the market, so that you get to the point that you TRUST them.
The fact is that in any market, for each bar, there are only 5 pieces of information, the open, close, high, low and volume, yet there are now hundreds of indicators. Most of these indicators are displaying the same information and so are redundant.
For the record my set of indicators are:
* 4 Simple Moving Averages
* Bollinger Bands
* MACD
* Stochastics
But the way I use them is quite special, to learn more about how to become an expert at technical analysis visit:
Mail this postPopularity: 12% [?]
{The Ethanol Boondoggle Ends, and Brings the Corn Mania Down With It}
Jan0
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We’ve all read about the The Tulip Bulb Mania and the South Sea Mania. We’ve been told about the way they ended. The dramatic rise in stock prices beginning in 1995 was also a mania. The advance took prices to a new high in year 2000 and then to a reaction high in October 2007, from which level they have been falling nearly in a straight line falling since that time. If it is true that all price manias collapse and end at a point which is as low as, or lower than, the level at which they began, then it necessarily follows that the Dow Jones Industrials Average will fall to its level in 1995 – say 4000.
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It can be said that the run-up in Corn prices which began in October 2007 and came to an end in June 2008 was also a mania. It was propelled at least to a degree by a government-inspired program which was fraudulent from its inception: the the craze to produce ethanol from Corn. Remarkably, the product contains less energy than the quantity of energy which is required to produce it; and, ironically, the energy which is necessary to make it is largelyderived from petroleum. So, from the from the inception, the entire program was based on a false premise. The whole thing was a hoax. It had the undesirable effect of upending the global supply-demand and cost equations for Corn, whose principal uses have always been as people-food and animal feed.
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Now the inevitable result has come to pass. The mania has collapsed; and indeed Corn prices are lower now than they were at the time the mania began. There was no other possible end to the story.
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When we look at a Weekly chart of Corn for 2007-2008-2009 (to date), we note a vertical rise in prices in 2008 – a “blowoff” rise – which is depicted by tall white Candlestick bars for the weeks of June 6 and June 13, followed by a black bar for the following week (was that a “hiccup” or an “uh-oh” week?) and then, for the week of June 27, a tall white bar which completely encompassesthe the “hiccup” week bar. That tall white bar is a classic “Bullish Last Engulfing” pattern, bothin consideration of its location at the top end of a long uptrend and in terms of its shape. The Bullish Last Engulfing Pattern is strongly bearish,regardless of its name. Any investor who chooses to go or to remain Long after seeing that Bullish Last Engulfing Pattern,in the mistaken belief that the strong uptrend willlikely continue, takes his financial life in his hands. Indeed, in this case prices began to fall immediately following the appearance of the Bullish Last Engulfing pattern. Prices fell nearly without interruption for months, until December 2008, halting at a point at which prices were about 80 cents below those which were in effect at the beginning of the mania in October 2007.
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So, there are two morals to this story: 1) here is new evidence that prices in a financial mania always retrace to a point which is at least as low as the point at which the mania started; and 2) the Candlestick Bullish Last Engulfing Pattern is a bearish predictor that must be taken seriously.
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http://www.commoditiesjunction.com
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