Stock Technical Analysis Course

Chartists can learn from a stock technical analysis course or learn by personal study . Many chartists have the argument "follow the other guy...he may know more than I do about the basics." The basic tenet of the chartist is "the trend goes on until it ends." Many chartists try predicting a move in the trends. Chartists are known to end up with amazing profits at one time and enormous losses the next . Chartists always worry about their aptitude to recognize arrivals of trend reversals or an area of congestion. So long as the trend continues the chartist is happy . In analyzing the likelihood or the occurrence of a trend reversal , or the activity of a congestion area, or something is wrong with his trend , then unhappiness occurs to the chartist.

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Chartists are quite the characters . The wiggle waggles get him off . Usually what happens to chartists is that he/she does not see the forest but for the trees . And their toolbag isn't overfilled until that final moment when the noise of the information and systems clogs the channel of clear cogitation .

He continues to stare blankly for hours on end at the chart , not realizing what the chart is saying . His major fault here is that he/she looks towards the charts to tell him what prices are doing , instead of telling his requirements to the charts.

One suggestion : After the chartist gets out of their state of fogginess, they need to request something from the chart and write it down. The chart is none other than the computer of facts and information , and as with a computer , you have to let it know what you want the computer to tell you , and what criteria to use, and, only with a preprogrammed trading plan can this be done. The very first requirement a chartist has is that he has a plan for trading and that he gets from his chart the criteria that works with his plan . Investing in a stock technical analysis course is sound advice .

Chartists that become a success are

* a) less likely to take long positions
* b) they are more likely to close out positions before receiving a margin call .
* c) if they get a margin call are not as likely to put up another margin
* d) more likely to trade in a larger number of commodities and to pyramid their profits .

The unsuccessful chartist

* a) tends to cut profits short and allow losses to run
* b) will usually be long rather than short
* c) tends to purchase on days that prices drop and sell on days prices go up . Price level traders is what this action shows these chartists to be.

Track records aren't possible on general chartists, but on a specific chartist a track record is possible . Unless chartists allow track records to be done on them, you can't take the claims they make seriously. The "head and shoulder" formation would be doubted by few . Of course, the reversal signal of one will flag another to go on . More often than not , if a chartist is vindicated usually luck was what caused his decisions to be correct. The trader is more painfully aware that stock technical analysis course aptitude does not insure competent trading . Those who end up losing do so not always because of bad analysis but because of the inability to transform their analysis into sound practice . In order to bridge the gap that is between analysis and taking action means getting over the threat of fear, greed, and hope . This means they need to keep impatience controlled and abandoning a sound method for a new one, especially at times when adversity is happening.

Never in my life have I seen something like all the methods which are coming on stream for the use in forecasting commodity prices . Hundreds or different approaches and techniques are out there. Only a few will be presented in this chapter briefly.

There are some that are standard and those I use personally I'll put an asterisk beside. Within this chapter there are approximately thirty-six ways and means of forecasting prices . This doesn't even include the various great tidbits that can be found with a technical analysis course.

(This author is very happy with P&L charting , for it enables this trader to quantify price action on a daily and intra-day basis . I don't know of any other system where more than trend or congestion the activity of the day means more in the way trading prices are going . With P&L charting every day's activity shows congestion or trend evolution , sometimes within one day . )

Of course, , I become quite irritated by those traders who are convinced that their weighted moving averages, volume oscillator, resistance index, balance volume, god knows what else , - basis, cash , - are the only effective system . And, the one they happen to use is the only one that will ever be effective and that they have no use for fundamentals, open interest, wave theories, chart patterns, point and figure, many others, and are blinded to the approach of others . ( Okay . I got that off my chest .)

These traders often do not even use their own systems and seem to me, at least , to be continually fighting the market . Assuming a trader has studied a technical analysis course and has a forecasting method plan that puts together various methods and they are combined to help him profit from the market continually, then listening to this trader is a good idea . In the section on planning , the author will portray his own market place approaches and you will be surprised how flexible he is .

There are three basic methods to analyze the market behavior of commodity prices .

1. fundamental
2. mechanical
3. technical

FUNDAMENTAL

Often the market goes in the opposite direction of the fundamentals due to factors like technical ones. Fundamental traders are interested in the price movements that are long range and have to be ready to wait . Although they may deny it , but there are just too many external factors to be taken into account , such as the natural response to fundamental influences , shown in fluctuations that occur each day. So you don't need to seek them out and analyze them.

MECHANICAL

Mechanical methods use price and price alone to determine what action to take and the action doesn't require a trader's decision . There are three different methods.

1. chart
2. computer summaries
3. moving averages

Going through a technical analysis course will teach these rigid trading rules to be followed faithfully and it is usually based on some mathematical formula to give you the trading time that is right. A mathematical formula is used by the computer, which tells you want to do. One of the beauties of the mechanical method is that you can back check it . Computer based methods are often biased towards trend analysis that is mathematical ,using moving averages and other trading systems . The computer can read charts for you and all of the decision rules can be both formulated as well as tested.

TECHNICAL

Over the past years , a vast amount of work has been done to give means of tools that are technical, - all with the aim of anticipating futures prices from trading statistics , e.g. price, volume, O.I .

There are four broad areas of the technical approach .
1) patterns of the price charts
2) methods of trend following
3) analysis of character of market
4) structural theories.
Various methods for charting are available. The following are the most popular :
a. daily high/low/close bar charts
b. the method of point and figure
c. moving average of closing prices

Technical analysis lists of various approaches can be cataloged by the following technical approaches .
1) reading of tape or board
2) price chart analysis - which includes
a. trends in prices
b. support as well as resistance
c. consolidation ( continuation and reversal )
d. price formations and patterns
e. rules of measurement
f. wave theory
3) open interest and volume analysis
4) various indicators that are technical which can include :
a. measures of relative performance
b. periodic price performance study
c. contrary opinion and opinion survey

Later there will be more discussion of this.

The majority of models have a foundation that is on a system of moving averages . Some are difficult and have many variables . A bead is drawn on a trend direction by most models after it has been manifested and will keep traders in this market as long as you don't have a change in the trend. Some types of moving averages attempt to anticipate changes in trend . These are gainful to a trader that is properly capitalized who is able to start a position that is recommended and may be beneath more losing trades.

A stock technical analysis course will teach that the idea behind a moving average ( MA ) is figuring when the price direction differs from recent price averages. As long as the current price remains above the average price of say the last ten, twenty or one hundred days the trend spins onwards . Most often observed is the ten day MA of closing prices . The advantage to this method is that it gives equal weight to each day's price . The MA assumes that the trader bestows as much importance on last week's prices as he does on yesterday's .

The rules of reality are not obeyed here. A short term trader's horizon is extremely limited . Commodity prices do vibrate more rapidly than the prices of most other investment forms , therefore, a shorter series usually performs best .

An ideal MA should :

1) immediately observe a price trend turn and not several days after the turn
2) the MA plot shouldn't be so close to the daily prices plots that we get lashed into consolidation or minor swings.
3) this MA plot must be malleable to the volatility of the specific commodity.
4) if the commodity locks limit the MA plot should be responsive .

The problem with this approach lines for MA can be too slow to show a reversal . Usually , moving average technicians tend to be guided in their trading decisions by changes that occur in the price market based on the line of MA. The more sensitivity there is with the MA the smaller the advance differential amount and degree will be and the larger the number of sell and buy points , which leads to a lot of whip-saw and some small losses as learned in a stock technical analysis course.

Of course , as the time span is shorter, the more sensitive is the moving average to a trend termination of a reversal . New trends will be acted on earlier and do not need much time to establish themselves . Of course, tarders usually pay for the sensitivity because, and to repeat , the larger the trades are that get made and the shorter the moving average is and to whip-saw losses greater comissions are added.

This means, when it comes to the price trend turn, there is a delay with moving averages . Many times the delay is much greater than would be the case utilizing either simple charts and point and figure charting and most certainly P&L charting . The main advantage of this position is that users are automatically put on board for each trend with substance ( as do all systems of trend following .) More can be found out from a technical analysis course.