Author Topic: Technical Analysis  (Read 2851 times)

Offline Maxforce

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Technical Analysis
« on: March 18, 2007, 11:57:21 PM »
Hello everyone,
I have launched a blog, finally.
Feel free to visit at http://fusiontrader.~.com

Below is an excerpt from one of my articles:

Technical Analysis

We have often heard about Technical Analysis or simply TA.
What is it actually?


According to Investopedia at http://www.investopedia.com, it is a method of evaluating securities by analyzing statistics generated by market activity, such as past prices and volume. Technical analysts do not attempt to measure a security's intrinsic value, but instead use charts and other tools to identify patterns that can suggest future activity.

Furthermore, Investopedia says, Technical analysts believe that the historical performance of stocks and markets are indications of future performance. In a shopping mall, a fundamental analyst would go to each store, study the product that was being sold, and then decide whether to buy it or not. By contrast, a technical analyst would sit on a bench in the mall and watch people go into the stores. Disregarding the intrinsic value of the products in the store, his or her decision would be based on the patterns or activity of people going into each store.

Well said. Basically the main key points are:
1. Stock market is ultimately about supply and demand. Technical Analysis (TA) is used to measure this supply and demand theory.
2. Tech analysis (TA) is a method to MEASURE the PYSCHOLOGY of the market. Purely from SUPPLY and DEMAND point of view.
3. Its main assumption is that HISTORY REPEATS ITSELF

In my Learning Journey article, I mentioned the key contents which I identified as branches of TA. They are:
1) Candlesticks
2) Patterns
3) Indicators
4) Market Timing


Candlesticks.
The popular hot dog chart originated from Japan has now become a key element in charting. However, the basic candlestick has now evolved to many versions. For example, the Heiken-Ashi Candles, The Renko Chart and etc.
Candlesticks have the ability to foretell a reversal of trend.


Patterns
I believe this is originated from the West. But then I could be wrong.
For example, the Head and Shoulders pattern are also known as the Buddha pattern.
Patterns is a breakout system with the ability to give the practitioner the technical targets of the breakout.


Indicators
This I am pretty sure came from the West with the exception of later developments or discoveries. The Japanese were however, I think, the first to use Moving Averages and its crossovers.
Very often, many people think TA refers to Indicators alone.
I beg to differ. In my opinion, Indicators are a part of TA but not the whole of TA.
Indicators have the ability of indicating whether the particular counter would likely move to the breakout and the possibilities of a retracement.


Market Timing
Originated from the Dow Theory, Elliott Wave and Gann Analysis come into the picture. This is not a simple analysis which one could do. There are many pitfalls to avoid. For beginners, its best to avoid this complex theory.
If used correctly, this is the ultimate tool which could time the market - capturing all fluctuations.

At Fusion Trader, we aim to combine all these four methods for our learning process.

Thank you for your time.
Five points a day, keeps you out of harm's way.

Offline booffett

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Re: Technical Analysis
« Reply #1 on: March 19, 2007, 10:25:44 PM »
Is this the reversal? I bet not. The increase in price is not justified by the decreasing in volume. Besides, the increase in price is mainly leaded by some big cap stock, which is manipulative and demand more scrutiny from traders. In fact, i remain skeptical on the price move, as i judge that the increase of the price is more probable an act to cover the gap to resume its downtrend. However, i am neither encouraging traders to short the market, as i am not so confidence this time that the market will continue to move downwards. Wait and see is probably the best strategy. The market will need some time to cool down. The market need to rest for the sake of a longer journey.
The problem with cut loss is, easy to say hard to do; the problem with let the profit run is, most often, the profit only run 100m, not the 400m as you expected.

http://www.booffett.~.com/

Offline Maxforce

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Re: Technical Analysis
« Reply #2 on: March 19, 2007, 11:20:57 PM »
Go create new topic la...
Why talk about CI direction when I didn't even mention them in the thread :P
Five points a day, keeps you out of harm's way.

Offline earwax

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Re: Technical Analysis
« Reply #3 on: March 20, 2007, 10:47:26 PM »
This is great! You should write a book.  :D
Right beside every great brain there is... Earwax! :)

Offline Maxforce

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Re: Technical Analysis
« Reply #4 on: March 21, 2007, 08:11:04 PM »
Thanks but I am still, unfortunately, as much as I hate to admit it, a beginner.
Five points a day, keeps you out of harm's way.

Offline booffett

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Re: Technical Analysis
« Reply #5 on: March 21, 2007, 08:52:37 PM »
Thanks but I am still, unfortunately, as much as I hate to admit it, a beginner.


the moment a thick blood trader admit himself is a beginner is a sign of the first step achievement in his trading life...
The problem with cut loss is, easy to say hard to do; the problem with let the profit run is, most often, the profit only run 100m, not the 400m as you expected.

http://www.booffett.~.com/

Offline Maxforce

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Re: Technical Analysis
« Reply #6 on: March 22, 2007, 07:41:43 AM »
You re kidding me
Five points a day, keeps you out of harm's way.

Offline yunhui98

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Re: Technical Analysis
« Reply #7 on: March 31, 2007, 06:39:40 PM »
Hi,

How to indentify a optimum standard deviation in bollinger band by using metastock program?

Thank you.


Offline booffett

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Re: Technical Analysis
« Reply #8 on: April 04, 2007, 11:31:08 AM »
Hi,

How to indentify a optimum standard deviation in bollinger band by using metastock program?

Thank you.


beware of tech analysis...

buffet get rich not by playing the market, but by playing those people who play the market...

kjekekekekekeke
The problem with cut loss is, easy to say hard to do; the problem with let the profit run is, most often, the profit only run 100m, not the 400m as you expected.

http://www.booffett.~.com/

Offline earwax

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Re: Technical Analysis
« Reply #9 on: April 04, 2007, 05:48:52 PM »
beware of tech analysis...

buffet get rich not by playing the market, but by playing those people who play the market...

kjekekekekekeke

:-\

I thought Buffet got rich by fundamentals. He never played people.
Right beside every great brain there is... Earwax! :)

Offline Maxforce

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Re: Technical Analysis
« Reply #10 on: April 05, 2007, 04:27:21 PM »
Hi,

How to indentify a optimum standard deviation in bollinger band by using metastock program?

Thank you.



Best to tweak the settings until you re satsified that it fits your trading style/strategy.

:-\

I thought Buffet got rich by fundamentals. He never played people.
Buffett is more aggressive, unlike his sifu. Buffett plays derivatives, currencies too, if I am not mistaken. 
Five points a day, keeps you out of harm's way.

Offline smartinvestor01

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Re: Technical Analysis
« Reply #11 on: April 07, 2007, 11:34:22 AM »
Hello there,

Technical Analysis could be a very important guide line for those trading stocks for short term proceeds. However, I am sure that long term traders seldom look at Technical Analysis.

For instance, Warren Buffet trading strategy without looking too much on Technical Analysis makes a success whereas I become a professional trader in my perception.

His trading strategy is working well and he is become known in the world of stock market. Warren Buffet proves that Technical Analysis might not be enough as I have studied that he looks much on Fundamental Analysis.

This is just my view.. Bye..

Offline Maxforce

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Re: Technical Analysis
« Reply #12 on: April 07, 2007, 07:29:44 PM »
Technical Analysis is a tool.
Fundamental Analysis is a tool.

Buffett invests and trades in US.
And contrary to popular beliefs, he did not invest to riches.
If he merely invests like how Graham does it, I doubt he could make it to even Top 500 riches man.
Five points a day, keeps you out of harm's way.