I am looking forward to starting studying technical analysis, but I don't know where to start. There are tons of resources on the Internet, but some of them focus on different things. So far, I've invested only in dividend paying shares, but I want to step up my game a little. Any help, please?
Perhaps StockTA (http://www.stockta.com/) or Stockcharts (http://stockcharts.com/school/doku.php?id=chart_school:overview:technical_analysis) may be of interest or helpful to you, and add in Investopedia (http://www.investopedia.com/university/technical/) to decipher terms. Some brokerage firms (e.g., Schwab, Fidelity and probably Scottrade, among others) have advanced trading platforms. HTH. YMMV.
Learning to read a price chart is a little bit like learning to read a foreign language. I'm not exactly fluent myself and it's hard to tech somebody something like this via a bulletin board. I'll try to give you some of the broad strokes though. A stock, bond, commodity, currency etc. can go any of three ways. It can go up, down or sideways. If the price is moving from the lower left part of your screen to the upper right, you're probably in an up/bull trend. If the price is moving from the upper left to the lower right part of your screen, you're probably in a down/bear trend. If it's choppy and going sideways or slowly against its longer term trend, you're probably in a counter-trend/correction - or the beginning of a trend reversal, but this happens significantly less often than a trend continuation. In general, you want to ride the trend. That's where we get the advice "buy the dips" and "sell the bounces." The easiest way I know to do that is, when you see it, put that choppy counter-trend price action into a channel (with whatever software you are using) and wait for it to make a significant break of the channel in the direction of the larger trend. Then hop on board. Move your stops up/down with the market following it at a far enough distance that short term swings aren't likely to take you out, but close enough to protect your capital. The easiest way to do that is to look at past short term price swings to get an idea how volatile what you're trading tends to be. to sum up this strategy: 1. identify a longer term trend 2. find/wait for choppy, shorter term counter-trend price movements 3A. if you're a little bit aggressive, buy the dips & sell the bounces 3B. if you're a little bit conservative, put that choppy price action in a channel, when makes a significant break of the channel in the direction of the larger trend. 4. move your stops with the market at an appropriate distance relative to expected volatility. If you want something fairly quick & practical to give you a better sense of it as well as some different strategies, pick up a copy of Visual Guide to Elliott Wave Trading by Jeffrey Kennedy & Wayne Gorman. Or if you want to understand the philosophy behind it instead of just the nuts and bolts of it, check out Elliott Wave Principe by A.J. Frost and Robert Prechter.
I will use a bit of basic technical info (price, volume) when looking at entrance / exit points of securities that have some compelling fundamental reason that makes me want to buy/sell/short. But a chart alone is in no way a compelling reason for me to get interested in a security - there needs to be a fundamental reason(s) for me to want to get in or out. Fundamentals trump everything else in my world.
Thank you I don't usually make these type of posts, but this one put things in perspective for me. I was told to read "Visual Guide to Elliott Wave Trading" countless times but never followed the advice. Apparently, it's worth it.
There are all sorts of gadgets, apps and software(s) out there that are geared toward technical trading. Each of these companies will tell you that they are on to something that will make you think you can make millions in the market, but if you really look at a lot of these methods they are basing decisions and results on what has happened historically. It is pretty easy to show a great result after the fact isn't it? Take some time to look at what is being said about the future, were they right? Did they backtrack and minimalize their position? What do other investors have to say about that system? heaven knows you can research just about anyone's feeling. No matter what anyone tries to tell you always keep in mind that investing in the market is a speculative endeavor, yesterdays results are not a reflection of what tomorrow will be. You maybe able to time the market to a certain degree, but it should not be considered to much more then just a lucky guess. Just do your homework on a company and know as an investor what your comfort level is investment wise. Gadgets and software help but are in no means a crystal ball.
Well, I was hoping that some real traders would come and explain me like I am 5 where to start. But if yesterdays results are not a reflection of what tomorrow will be (of course, this can be extended), where would you start?
To start with, I would suggest getting used to indicators such as the various moving day averages, and the RSI and MACD indicators. In no particular order, here are some chart web sites that I occasionally look at. No recommendations here; use at your own risk. http://www.candlesticker.com http://www.freestockcharts.com http://thepatternsite.com http://niftychartsandpatterns.blogspot.com http://stockcharts.com http://www.stockta.com Investopedia helps with terms. HTH. YMMV.
Thanks. I'll start writing down some important terms and maybe get accustomed with some basic trading strategies. One thing that I hear some local traders saying is the fact that all the theory written by the experts is not applicable in the local stock market, mainly because our economy depends a lot of some key people. Most of them are corrupt and more and more of them are going to jail. If they go to jail, their business stops working, implicitly the shares go down. Happened several times this year.
There's a lot of useful tips above and it's definitely worth applying ones that you can work with. I've always found technical analysis part art, part science, and very often self-fulfilling if you choose the right timelines. I've always had a basic structure which I build upon, depending on which technicals have looked the most relevant. So underlying direction, trading volume and anything to suggest a change or continuation of either of those factors are my starting point.
