Re: Technical Analysis Lingo & Trading Time Frame on this thread.
A stock is in one of 3 stages: uptrend, consolidation (trading range), downtrend. Fortunes are made by correctly identifying trends and change of trend. On an uptrend, buy on a retracement and hold until the trend is reversed. On a downtrend, sell (short) on a bounce until the trend is reversed. In a consolidation stage, identify support and resistance levels of the trading range and buy at the support level.
Despite the chart showing a particular pattern, a stock can surprise traders. Company news, analysts upgrades/downgrades, quarterly reports, hedge fund plays, can all change a chart pattern very quickly. Using stops and trailing stops when trading is a must!
In order for us here to speak the same TA language and so understand each other better, I've framed up some parameters for this forum:
1. We'll be using Trader Vic's definition of a trend and trend reversal. Chapter 7 in his book "Methods of A Wall Street Master" describes how to identify a trend and a reversal of trend. The book cost about $20 and IMO, well worth to own. Alternatively, chapter 7 is less than 20 pages and would be an easy read at a library.
2. For stock charts, we can use the following chart sites... they are free and more than sufficient for our purpose.
siliconinvestor.com
For Canadian stocks:
207.61.23.99
3. Our time frame for trading is from days to weeks, not exceeding 1 year. We are not day traders because "a day does not a trend make." Besides, money can be made with less noise and stress by simply focusing on the larger swings, rather than the daily gyrations.
4. For technical analysis tutorials, and end of day market analysis, we can use
stockcharts.com
I find this site terrific! Not only does it have end of day market analyses and stock chart charting capabilities it also has well written TA tutorials and explanations on TA indicators.
5. If you can't find answers to your TA questions on the above site, I would recommend Jack Schwager's Book "Getting Started in Technical Analysis" which cost around $30. In my opinion, this is a good book to use as a reference for real world chart reading especially if you're new to TA.
6. A stock chart is an evolving entity. What you may see as a developing pattern could easily change into a new pending pattern after only a day's movement. So, we want to encourage different views and opinions on a stock chart. Please do not be offended if chart interpretations of others are different from yours.
Have fun, and be profitable! |
