MDA - Market Direction Analysis Message Board

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Strategies & Market Trends : MDA - Market Direction Analysis

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Dec 2 4:00 PM EST

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To: ahhaha who wrote (61641)	10/31/2000 2:27:46 PM
From: Wayners	Read Replies (1) of 99985

It all depends on how you analyze the chart. Depending on a stock's float and general investor interest and corresponding volume stocks are going to trade quite differently. My chart analysis doesn't look for the typical chart reading patterns but rather uses statistical analysis to identify the important characteristics of how that particular stock must be traded. The important characteristics to me are how often fluctuations in direction have been occurring, how much volume a stock has been getting, how much movement in range between high and low expressed as a percentage it has been getting and how where is the price relative to its standard deviation from the mean. There are areas where future movements are highly predictable but there are plenty of situations where future movements are not predictable. The key is to carefully weed out the unpredictable investment options and find those that have historically been predictable. Then you need to find fresh reversals in direction and go with the flow and exploit the market's efficiency weakness in that particular security. In a truely efficient market all prices move in sudden stairsteps that cannot be seen ahead of time and cannot be profited from because you can't make money AFTER prices have already moved. You'll notice that most charts do not look like this--they're curvilinear that can take several days to get to the higher or lower point with plenty of opportunity for entry and exit at a profit. The key is to have the tools available to find fresh reversals (that takes real time price and volume information--not necessarily news but it could cause it), take advantage of the historical inefficiencies of that security and only ride it for a single leg at a time or up to 3 legs maximum before taking profits. The frequency of the oscillations in price tell you when to take profits. Try to sum a lot of profits up and they add up fast. Using charts to nail exact tops and bottoms IMO does not work very well. Charts will help you capture the meat of each move, then move on to the next very high percentage play. I hope this helps enough to get you interested in learning more and testing it out.

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