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Strategies & Market Trends : Technical Analysis - Beginners
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To: Nazbuster who wrote (8419)7/10/1998 12:28:00 PM
From: Richard Estes  Read Replies (2) of 12039
 
Patterns are subjective. Indicators with trigger points for buy/sell points are objective.

Take a simple moving average. You buy when the price moves up though the 89 day EMA or other type MA. What you decided to do is buy when the price is higher than the average of the past 89 trading days. People are willing to pay more for the stock, something is happening. When price falls below, sell because the crowd says they won't buy at a premium. I am not suggesting that this one MA will make you rich, but pointing out that the trigger points don't require any interpretation. Does it work? you have to test it by looking at years of data on a large number of stocks.

You want to learn to trust your system, and act on it when signals come. Your mindset determines what system is appropriate for you. The books you are reading only provide you with an understanding of basic indicators. The system you trust must be your own that meets your needs not anyone else's.

Black Magic? No while the predictive aspects seem like magic. Most indicators are just application of math to price and volume. They measure contraction and expansion of price. Funnymentals are the real smoke and mirrors, where you are dependent on sources with an agenda for your information.
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