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This page is being written for Investors/Traders who are new to Technical Analysis.For A Start ,I Have Always Maintained ,Fundamental Analysis Tells,What to Buy ,And Technical Analysis Helps In Fine Tuning Our Investments,SoTo Say,Knowedge of Technical Analysis will Definitely improve one's Investing Decisions. You Would do well , to refer Page 'Basic Investors awareness' of my blog 'retailinvestor420.blogspot.com' ( scroll down the page!),to go through the Rationale of Technical Analysis,Dow Theory,basic Tenets Of Technical Analysis) Technical analysis is based almost entirely on the analysis of price and volume & fields which define a security's price and volume are
TREND - Trend is the most important part of technical analysis,All the tools of the technical analysis-support and resistances,price patterns,moving averages,technical indicators etc are used in identifying the trend of the market,so as to be able to participate in the trend.(As is said - trade in the direction of the trend).Trend is simply the direction of the market;Market Moves mostly are characterized by series of Zigzags,which resemble a series of successive waves with obvious highs and lows.It is the direction of these peaks and troughs that constitutes market trend.Trend can be Up,Down Or Sideways;Also,Trend is usually broken down into three categories Major,Intermediate And Near Term Trends Major Trend May last well over a year,intermediate-few weeks to few months,Near Term Trend-Less Than Two to Three Weeks.Now ,all This is as is what is written in various books, AS PER INVESTOR'S POINT OF VIEW,REMEMBER WARREN BUFFET++ELDER ALEXANDER==AWESOME COMBINATION- SIMPLY INVEST/TRADE AS PER THE WEEKLY CHARTS,UNDERSTAND P/E ANALYSIS,BUY AND THEN HOLD FOR LONGER PERIODS(FEW YEARS),((UNLESS YOU GET SELLING SIGNAL ON MONTHLY AND WEEKLY CHARTS))AND YOUR MONEY SHALL GROW PLENTY FOLDS,DON'T TRADE IF YOU DON'T HAVE TO,DONT GET ENTICED BY EUPHORIA ALL AROUND YOU,IF YOU SIMPLY UNDERSTAND WHAT ARE THE YIELDS PROVIDED BY THE MARKETS,AND WHAT IS THE OVERALL TREND,ONE MAY GO WRONG -WHEN DAILY OR HOURLY CHARTS ARE CONCERNED, BUT SHALL SURELY REMAIN IN TREND,IF ONE FOLLOWS WEEKLY/MONTHLY CHARTS,BUT IT REALLY SURPRISES ME,WHEN I SEE PEOPLE WHO ARE DOING REAL GOOD IN THEIR JOBS , AND THEY CALL ME UP , FOR AN ADVISE THAT THEY ARE MAKING 15% IN 30 DAYS , SHOULD THEY SELL OUT, IF THE STOCK PICK IS GOOD, FUNDAMENTALLY STRONG,BOUGHT AT GOOD PRICE,NOT MUCH DEBT,HIGH PROMOTER HOLDING,AND SCOPE FOR GOOD GROWTH OVER TIME , WHY SHOULD THE TARGET BE ONLY 15%...STAY ON-STAY INVESTED-AND YOU SHALL HAVE A REAL CHUNK OF MONEY OVER TIME. AS PER TRADER'S POINT OF VIEW-NOW, THIS IS AN ENTIRELY DIFFERENT STORY , A TRADER , IS ONE WHO HAS TO RUN HIS HOME TRADING-STOCKS,COMMODITIES,DERIVATIVES-WHATEVER.(HENCE ARISES THE NEED TO TRADE SHORT TERM CYCLES,AS HE MUST GENERATE CASH-WEEKLY/MONTHLY FOR HIS RECURRING EXPENSES)BUT AGAIN, HE/SHE HAS TO ALWAYS KEEP HIS TRADING CAPITAL IN CONSIDERATION PRIOR TAKING HIS TRADING POSITIONS.WEIRD THINGS I HAVE SEEN,TRADER'S A/C MANAGED MORE BY HIS BROKER/RELATION MANAGER(ASSIGNED TO THE TRADER BY THE BROKERAGE FIRM, WHO IS MORE THAN HAPPY TO ADVISE THE TRADER TO TRADE FUTURES AND OPTIONS-FINANCIAL SUICIDE IF YOU ARE IN EARLY STAGES OF YOUR TRADING CAREER)HE HAS 50,000,GIVEN LEVERAGE PRIVILEGE!!OF 10 TIMES, AND BROKER/RM ADVISING THE TRADER TO TAKE UP TO POSITIONS OF 5 LACS-THE TRADER DOES NOT HAVE COMPUTER,DOES NOT KNOW A JACK OF TECHNICAL ANALYSIS--THIS IS AS STUPID AS IT GETS-SORRY FOR THE WRONG WORD,BUT ONE CAN'T EXPECT SOMEONE ELSE TO MAKE THEM RICH , I DO HAVE FEW FRIENDS WHO ARE VERY GOOD AT INTRA/SWING-BUT THEN THEY HAVE WORKED HARD FOR MANY YEARS AND HAVE RESPECTABLE POCKETS AND YEARS OF EXPERIENCE BEHIND THEM COUPLED WITH GOOD INFRASTRUCTURE. HERE,I AM CONFIDENTLY ADVISING/OFFERING TO NOT TO LET GO OF ANY SMALL OPPORTUNITIES THAT ONE MAY HAVE GENERATING SMALL AMOUNT OF CAPITAL ONLINE(VISIT MY BLOG).REMEMBER,INTERNET MARKETING HAS A HUGE HUGE FUTURE IN INDIA. READ
 SUPPORT AND RESISTANCES: Simply put,Support Zones are areas on price chart where buying power exceeds selling power and price fall stops,and vice versa.The development of support and resistance levels is probably the most noticeable and reoccurring event on price charts. The penetration of support/resistance levels can be triggered by fundamental changes that are above or below investor expectations (e.g., changes in earnings,debt levels,sharp changes in promoter holdings etc) or by self-fulfilling prophecy ( investors buy as they see prices rise)-Sudden Price surges are often seen-up or doen -as price break support or resistance levels. ((PLS REMEMBER ,IF YOU DO START TO DEVELOP SOME LIKING FOR TECHNICAL ANALYSIS,PAMPER YOURSELF BY GOING THROUGH THE BOOKS,TRADING FOR A LIVING BY ELDER ALEXANDER AND TECHNICAL ANALYSIS OF STOCK MARKETS BY JOHN MURPHY).Now,more you know the stock , fundamentally and technically,better your predictions will be in regards to that stock,And as i always say and hereby reaffirm that,If you are investing, it is ok, you should have intelligent diversification in your portfolio,But ,If You Are Trading,Select your markets,and learn/know as much as you can about the markets you trade(Here ,I Mean stocks when I say markets).( INTELLIGENT DIVERSIFICATION- PEOPLE WILL HAVE STOCKS OF 10 DIFFERENT COMPANIES, AND 5 OF THEM SHALL BE FROM THE SAME SECTOR-AND THEY SAY - THEY ARE DIVERSIFIED ). It Is very important,that volume be studied along with breakout/downs of resistances/support levels, like if breakout is on high volume and retracement back to support/resistance level is on low volume,chances are the breakout/down is a valid one and shall prevail. ((READ CHAPTER 4 OF THE BOOK- TECHNICAL ANALYSIS OF THE FINANCIAL MARKETS-BY JOHN MURPHY-WHERE THE PSYCHOLOGY BEHIND THE ROLE CHANGE OF SUPPORT AND RESISTANCES IS BEAUTIFULLY EXPLAINED)) TRENDLINES-Lines drawn through the reaction highs and reaction lows , Though as far as candle charts are concerned, We May draw trendlines touching the shadows or the real bodies.When,considering weather the trend line has been breached or not,generally accepted levels are 1% penetration for the shorter term trading,and 3 % penetration for longer term trading MOVING AVERAGES-We will keep it simple,and discuss only SMA(simple moving average) and EMA( exponential moving average).
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