Technical Analysis with shade343 :D Lecture 1
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Ok. I decided to share some knowledge with potential speculators here.
Remember, TA is a good way to forecast share prices based on the graph alone.
Contents
A. Definition of Technical Analysis
B. Art or science ?
C. Application in Markets
D/E Technical vs fundamental analysis
F. Guidelines in Using TA
G. Plotting Prices
Definition of Technical Analysis
John Murphy, author of "Technical Analysis of the Futures Markets" says:
"The study of market action, primarily through the
use of charts for the purpose of forecasting future
price trends."
Martin Pring, author of Technical Analysis Explained" says:
"The art of identifying a new trend at a relatively
early stage and riding on that trend until the weight
of the evidence proves that the trend has been reversed."
My Lecturer Says:
"The art of interpreting market action (price, volume, etc)
and signals to determine the direction of the trend, the
extent of its move as well as its timing.
I say:
"TA is a tool used by speculators and greedy baskets to make a quick buck from the stock market".
TA : ART OR SCIENCE ?
TA Started more as an art.
TA has been made more scientific due to rapid development the last 10 years, and the extensive application of computers in the field.
However, judgment is always needed - though with lower dose of subjectivity, given higher quality of tools today.
Hence, TA will remain an art, but will have greater scientific underpinning.
APPLICATION IN MARKETS
Applicable in all traded markets - currency, interest rates, commodities, stocks and indices.
Reason : TA attempts to capture market psychology, which underlies all financial markets.
Applicable in equity markets in stock selection as well.
DISCLAIMER: THIS LECTURE NOTES ARE MEANT AS A GUIDE. I, NOR THE AUTHOR OF THESE NOTES, WILL BE RESPONSIBLE FOR ANYTHING HAPPENING TO YOU ARISING FROM THE USE OR ABUSE OF THESE NOTES. -
TECHNICAL ANALYSIS (TA) VERSUS FUNDAMENTAL ANALYSIS (FA)
Fundamental Analysis : gives the causes of price movement.
Technical Analysis : studies the effects of price movement.
FA typically entails economic analysis on economic expansion/recession (GNP/GDP growth), trade balance (deficit/surplus), employment/ unemployment, inflation, money supply, etc etc.
Author's remarks: Generally, Im more inclined towards FA than TA when forecasting share price in the long term. However, occasionally, I do use TA to decide what is the best price for me to pick up the shares.
RELATIONSIP BETWEEN TA AND FA
Long-term, mutually supportive.
Short-term, conflicts not uncommon.
FA tends to be economic in nature. Hence not able to forecast non-economic events such as political and other crises which often move financial markets.
GUIDELINES IN USING TA
TA is about probabilities, not guarantee.
TA is empirical. Looking for evidence to draw conclusions about markets.
Tool Box approach – different tools for different needs and different situations.
Constantly improve skills-TA is an art. It gets better with more practise.
Avoid Holy Grail mentality--There is no such thing as a one and ultimate powerful tool that will give you a correct result 100% of the time
Create your own tools. This is acheived with experience and practise. -
PLOTTING PRICE ACTION
1. Elements of a Chart
Time period - Day; week; month; hour; 5-minute; etc.
Price plotted - opening, high, low, close.
Axis - X axis : time period
Y axis : price
Charting Techniques
High-low-close BAR chart
LINE chart - joining only closing prices
CANDLESTICK bar chart
Candlestick Bar Chart
Japanese origin, but gaining popularity elsewhere especially for Japanese markets.
Data - Open, high, low, close.
Possible only for markets which are traded in an exchange where opening price is available.
Largely same data as conventional charting but focus is on opening and closing price of trading session.
White bar - when closing price higher than opening price.
Black bar - when closing price lower than opening price.
EXAMPLES:
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FEEL FREE TO POST QUESTIONS IN THIS THREAD! I WILL TRY MY BEST TO ANSWER EVERY ONE OF THEM!!
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be better off if you have a short intro then just show some charts and draw trend lines on them and indicate the formation type and whether is an uptrend/downtrend and where's the potential breakout points. Just theory alone is very dry leh.
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kk. This is a lecture after all.Originally posted by KumSioJui:be better off if you have a short intro then just show some charted and draw trend lines on them and indicate the formation type and whether is an uptrend/downtrend and where's the potential breakout points. Just theory alone is very dry leh.
I will try to post some pics
Some of them will be covered in Lecture 2, 3 and 4 -
Yayy! Yayy! Woooh....
Finally there's someone sharing some TA here. Nice!
OK....
Just go to lesson 12. (The most advanced one)
Please give us a chart with a few of the TA at work.
And run them until no more TA is left.
Then, conclusion on a few of the favourite/ chosen TA.
Thank you! -
show some charts with good trading opportunities lar. why so slow
faster gimme some buying tips ler -
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Well, I cant find a good chart now that msn.shareinvestor.com is no longer accessible....Originally posted by KumSioJui:show some charts with good trading opportunities lar. why so slow
faster gimme some buying tips ler 
I don have a shareinvestor account either. Poems provide free metastock data, but I cant seem to link the graphs here...
I'll continue searching -
try commerceasia.com or finance.yahoo.com, you can use those to build your lectures, to draw trend lines a bit more tricky, you have to save those charts on your PC, then use some graphic software mebbe paintbrush to draw trendlines and upload the charts again to imagebucket or I think can just use sggers foto forum to do it.Originally posted by shade343:Well, I cant find a good chart now that msn.shareinvestor.com is no longer accessible....
I don have a shareinvestor account either. Poems provide free metastock data, but I cant seem to link the graphs here...
I'll continue searching
Is going to be tedious what you are abt to embark. I did it previously in my own forum, cutting/pasting/formatting all the bladdy info and charts, very tedious ah ...I wish you good luck -
I think I will just copy and paste whatever my lecturer gives me.Originally posted by KumSioJui:try commerceasia.com or finance.yahoo.com, you can use those to build your lectures, to draw trend lines a bit more tricky, you have to save those charts on your PC, then use some graphic software mebbe paintbrush to draw trendlines and upload the charts again to imagebucket or I think can just use sggers foto forum to do it.
Is going to be tedious what you are abt to embark. I did it previously in my own forum, cutting/pasting/formatting all the bladdy info and charts, very tedious ah ...I wish you good luck -
TA is a delusion craeted by gambling operators to induce people to gamble.
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okok. We all get your point.Originally posted by casino_king:TA is a delusion craeted by gambling operators to induce people to gamble.
Investing in shares and speculating in shares are 2 diferent things. Not all are speculators. Not all are investors. -
How do one learn to read the charts and graphs? There are terms and abbreviations used sometimes in the charts/graphs. Where can I learn them?