Online Stock Trader

Archive for January, 2010

It needs to be pointed out that as there are more and more market participants when they try charting out predicatively all the actions, the affect that accumulates can cause fluctuations to occur which might destroy much of the validity of all chart techniques .

You have a lot of company if you’re a chartist . There are literally thousands of people charting all the same things you chart . So, when there’s the signal of a major move , there will probably be many orders out there similar to yours. Particularly , stop loss orders being placed at the very same points by many chartists, can actually make various formations like false penetrations of trend lines occur . Charting is inevitably to some extent an inexact science , even for those who have a stock technical analysis course to fall back on .

You can make the choice what scale the chart is on and whether the closing price or the mid-price is what you use. When plotting movement of prices , there can be a distortion to either. Usually the latter is used most often , but since it occurs at the day’s end it is associated with a lot of profit-taking etc . Moreover , dynamic and unforeseeable events may play havoc with charts .

Charting is an approach that is a bit lazy . The neat clinical look of a sheet of paper appeals to the many weaker brethren . Who have no penchant or time to try to dig deeper. Most people like to think it is more productive to look at all the variations . As technical analysis spreads and more decide to take a stock technical analysis course, it will commence to defeat its own purpose , especially in a “thin” market setting.

It’s imperative to understand that if enough traders are going with chart interpretations that are usual for a specific commodity, it will influence the price of that commodity in the direction chartists expect prices to move . Chart followers can prove their own theories right . While a pure chartist does not wish to know a thing about fundamentals , combining futures trading taking from both strategies is what a wise trader will try. There is no 100% reliable chart formation . Chartists must look to other indicators for confirmation , such as changes in production from year to year, variation in business cycles , and changes in quantifiable sums like commodity prices , reduced to a single summary figure to register all diverse activities .

There are many times a commodity ends up going contrary to considerations that are fundamental due to a variety of different factors . To succeed a chartist has to be ready for hard work and a lot of study and to develop more experience. It is an art because of its skill and the finesse and experience of the technician . These are without doubt the essential ingredients of profitable trading . The technician must constantly check and re-check .

Another difficulty from charting stems from the belief that while the speculator knows all the commodity situation facts the same facts are known by many others who are professionals .

However, some events can occur without prediction and affect all traders . prices may not have totally discounted these happenings, which can catch chartists off guard and little can be done to keep a position in this situation protected except to be alert to recognize sudden change in the market trend and to be quick to act . ( Think about a hurricane that takes all the oranges out to sea).

Technicians are known to make a huge profit in one week and the next week take huge losses. It is a fact of life that prices will not fluctuate according to what their past performance dictates , although you do get some idea on a day to day basis with P&L charting .

Most systems are indictable when it comes to advisability because a track record is lacking. Each approach has to be looked at as unsuccessful until it has proved otherwise . To be perfectly candid , there’s little actual evidence out there to support chart analysis and it’s common rules . Many chartists tend to anticipate trends . This is a fallacy . You can’t recognize or even assume a non-existent trend . If you want to utilize a trend with the method following, you have to wait until the demonstration of the trend has occurred. Even then, the motto a chartist needs to have is that a trend goes on until stopping . Once again , he attempts figuring out the direction of a trend reversal as it happens. It doesn’t work . You can only realize an evolving trend as it happens. Most technical systems cannot anticipate a trend or trend reversal .

If a move occurs that is unexpected , starting all over is what happens to mot technicians. After dealing with losses again and again, quite a few traders just abandon technical studies since they don’t actually work. Because this happens on a regular basis, it offers more proof that short cuts don’t exist to trading success and there is nothing that works better than experience, work, and knowledge.

All we know for sure is that prices will fluctuate , but the amount of fluctuation isn’t known.

Protection is only available in those congestion areas because the congestion area defines you’re projection of losses . Even in congestions prices will fluctuate. Any technical approach that attempts to analyze congestion areas , and evolves a trading method therein , will give the trader and the broker glorious profits , since commodity prices happen to be in congestion , one form or another 85 % of the time .

The universal problem known to the professional and novice alike is when to get in and out of the market . Due to this, a stock technical analysis course will help you learn that technical analysis must encompass to a considerable degree fluctuations of price that are short term ( Once again pointing to P&L charting).

A chartist can decide to go with a stock technical analysis course or personal study can be their method of learning. Many a chartist goes with the idea “follow the other guy…he may know more than I do about the basics.” Most chartists follow the tenet is “the trend goes on until it ends.” Most chartists attempt to anticipate a trend move . Chartists are famous for making spectacular profits one week and then they lose big time the next time. Chartists always worry about their aptitude to realize when a trend reversal or a congestion area is starting . A chartist is happy as long as trends continue on. If it looks like a trend is going to reverse, or the activity of a congestion area, or something is wrong with his trend , then the chartist gets upset .

Chartists are an interesting species. Those wiggle waggles really get chartists off. Usually what happens to chartists is that he/she does not see the forest but for the trees . And, the chartist’s bag of tools is never over-filled until clear thinking is clouded by too much information .

He stares in blank, hypnotic, unreceptively at the chart for hours, not realizing what the chart is saying . The big problem they have is that they try to figure out what prices are doing from the charts , rather than telling the charts what he requires of it .

A suggestion : When chartists come out of the fog , they need to take time and write down the request from their chart . The chart is none other than the computer of facts and information , and just like with a computer , one must punch in what one wishes the computer to start to tell him , and the criteria that is by , and, this can only be done by a preprogrammed trading plan . A trading plan is required by the chartist and that from the chart he gets criteria that will work along with the plan he has. Investing in a stock technical analysis course is a great idea .

Most successful chartists are

* a) less likely to take long positions
* b) they are more likely to close out positions before receiving a margin call .
* c) not as likely if they get a margin call to put up additional margins
* d) tend to trade in various commodities and pyramid profits.

A Chartist that is not successful

* a) has a clear tendency to cut their profits short while letting their losses run
* b) will usually be long rather than short
* c) has a clear tendency to buy on days of price declines and to sell on price rises . This shows that these chartists to be mainly price level traders – .

In general on chartists, there isn’t a track record , but on a specific chartist a track record is possible . Until chart readers allow themselves to be subject to some type of track record , it is impossible to take their claims seriously . Few chart readers would have doubted the existence of the “head and shoulder” formation . Yet , one man’s reversal signal will be another’s flag continuation pattern . Usually , if a chartist is correct his market decisions were more often than not, a result of luck . The trader is more painfully aware that technical analysis course mastery does not insure competent trading . Chartists that lose their money don’t always lose because their analysis was off but due to the fact they weren’t able to turn this into practice that was sound. Bridging the vital gap between analysis and 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 during time of temporary adversity .

A stock technical analysis course teaches that if you’re able to make it through 1, 2, 3 or 4 years of commodity trading every price pattern will be seen ( look at that again ). Everything else is the endless repeat of different patterns. An interesting part of about being involved in commodities when some markets are on the rise, and you see other markets which are resting down at the bottom , (the end of bear markets) you can remind yourself ” they’ll be the next ones to go up .” Sure enough , the cycle is begun once again, some working from the top down and some working from the bottom up. Prices will stop going down on all markets they move from side to side for awhile and then advance in price . Bear markets always end in commodities, and bull markets always end too .

What I’ve just mentioned is representative of a long term philosophical approach to analysis of the market prices. Basically , if in the past year or so the market prices have gone down , there’s an end in sight to the bear market, and sometime the commodities will begin rising once again. You don’t even need a chart to realize this . However, when you look at charts by using a stock technical analysis course, you can see the bear trend is ending and a trader can figure out their position.

It is impossible to trade on the assumption that by looking at price movements generally by thinking about them or reading it in the news , that it will help you in the long term to assume prices and the way they move. More often than not such an approach will not restrict the limits on losses once you enter the market , because of negative price movements or after the accumulation of profits . For those that don’t use charting in up markets, for example, are taken by surprise by a bear trend or a bear crack . Chart analysis is absolutely essential to protect profits and avoid losses !  Learn from a technical analysis course first before you put your money on the line .