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Technical Analysis Explained

Technical Analysis Explained

If you will be new to forex trading trading, you might need a few much more details about the best buying and selling methods. Before you buy a “technical analysis revealed” guide publication or sign up into any technical analysis training program, here is an overview of exactly what you ought to expect:

What is technical analysis?

Technical analysis will be the application regarding past data of a commodity or equity to determine existing patterns that have come about over a particular time period. Utilizing these kinds of behaviours, you are able to now produce forecasts as to what will happen to the price with the investment or security that you are interested in, perhaps next week or subsequent month. The span of time included in your prediction may possibly rely upon the length of time incorporated within your info. Of course, it would be greatest to possess info including a longer period of time so you may figure out if the ups together with downs really help to make a pattern.

What could technical analysis do for an individual?

Once you actually have technical analysis spelled out to you, you may understand just how helpful it could be. By means of technical analysis, you are able to at least acknowledge exactly what condition the current market is in, given that it’s not sensible at all to trade in the event you do not possess any idea about the price movements. Technical analysis lets you acknowledge the market as trending or in a status of congestion. Generally, when you use technical analysis, you’re trying to find trends. If the value is continuously following the direction, you, as the trader, are generally at an advantage. Another state from the market that you simply might discover is the status of congestion. Whenever a commodity’s cost is in a status of congestion, the value associated with that product remains inside a little range. Only a change from the demand or in the supply can escape the congestion. If demand grows, the commodity’s value is likely to improve. In the same way, if the supply expands, the commodity’s selling price is most likely to decrease. Realizing these kinds of facts may assist you make a sound decision on whether or not you should be purchasing or selling.

Precisely how can a person study technical analysis?

Some of you may need technical analysis stated in terms in the particular tactics. If you are one of these traders, you could want to take a formal program in technical analysis so you are going to find out all the essential indicators or different factors when examining information and facts. You will likely be taught by a proven professional in buying and you are able to ask the expert all of the questions that you just have in mind. You are able to also discuss trading choices and moves with other investors. But when you will not have time with regard to a formal coaching course, you may also use a unique software that can supply a person with an easy guide. Yet another choice would be to frequent on the internet discussion boards in order to get to understand much more about technical analysis. In the end, irrespective of just what learning method an individual employ, technical analysis might help you make the most beneficial investing moves based with intelligent predictions.

Technical analysis can help you enhance the profit possibilities in investing. Keep in mind, though, that you just still have to combine technical analysis together with intuition, market awareness, and knowledge, as well as fundamental examination, which takes into consideration political and economical components.

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Forex Books

Forex Books

Some of the more all-encompassing forex trading books include one by Cornelius Luca entitled Trading in the Global Currency Markets. This book analyzes different global currencies as well as what forces drive the market. It discusses new technologies used in the market while presenting better understandings through colorful graphics and other real-world examples. Technical Analysis Applications in the Global Currency Markets, also by Cornelius Luca is just another edition, expounding upon the key aspects of forex trading for beginners. This book contains a cd-rom which demonstrates some of the methods discussed in this book. Steven Achelis book Technical Analysis from A to Z demonstrates 102 alphabetized technical indicators in the forex market. Moving from forex trading books encompassing the technical aspects, Mark Douglas has a book entitled The Disciplined Trader: Developing Winning Attitudes which, as the title leads one to believe, focuses on the necessary attitudes and behaviors for success in the forex trading market.
There are many different categories for forex trading books. One of them is introductions to foreign exchange as well as money markets. Within this category there are a handful of top-rated books in which you should indulge. Philip Gotthelf presents the book Currency Trading: How to Access and Trade the Worlds Biggest Market which presents a grand overview about how to take advantage of the currency markets and any fluctuations therein. UK London Reuters Limited provides a grand introduction to financial education training through the publication of An Introduction to Foreign Exchange and Money Markets. Julian Walmsley presents International Money and Foreign Exchange Markets: An Introduction which functions as one of the most essential pieces of reading for any undergrad, or specifically MBA, student in the fields of finance, business, or banking.
Another essential category is fundamental analysis. R. Mark Rogers offers a Handbook of Key Economic Indicators which provides quickly accessed information which relates to U.S. economic indicators specifically for analysts as well as traders. This book includes data, tables, graphs, charts, as well as explanations for the inflation, consumer spending, and employment figures listed for each month. Louis B. Mendelsohn offers a more advanced Forex Trading Using Intermarket Analysis which offers applications of intermarket analysis for some of the most widely traded foreign exchange markets. It seeks to identify trends in prices and other market influencers. Another great offer is in E. Stansbury Carnes book The Atlas of Economic Indicators: A Visual Guide to Market Force which is geared toward professional investors, executives, as well as students and individual investors. It is a very handy and accessible resource which also includes graphs and charts. Jack D. Schwager and Steven Turner combine to produce A Study Guide for Fundamental Analysis which famously provides the foremost authority on the subject, offering insight on future trading in three different volumes.
In conclusion, forex trading books can cover a multitude of categories from the aforementioned to technical analyses, strategies for profits, basic understanding of the forex trading system, and other more intricate subcategories in the field of forex trading.

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Forex Signal Safe – Automated Forex Signal Service

Forex Signal Safe – Automated Forex Signal Service

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How?

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The system is quite fascinating and eliminates the use of a robot, while retaining the method of automation.

Would you rather trust a robot or a professional trader who has a controlled risk strategy?

Jeff rarely leaves trades open overnight and rarely leaves trades open over weekends.

Trades have very tight stop losses and are consistently monitored.

I urge you to check it out. Ask them questions if you have any. They are great guys and respond to your e-mails.

Don’t miss this opportunity it’s going to be huge and they are offering a discount when they open the doors.

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Let a seasoned forex trader take over your account and put your profits into overdrive!

As time elapses you will begin to hear more and more about Forex Signal Safe and how effective their system is. This is more than just a robot, indicator or manual trading system.

They have combined the power of automation and professional manual trading to bring you a profitable and reliable trading system.

Generally speaking, their professional forex trader will trade your account and make you money while allowing you to have complete control, change lot sizes, close trades, and so much more.

Forex Signal Safe is NOT a Scam, is very clear and show some proof of the reliability of the product.

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TECHNICAL ANALYSIS

TECHNICAL ANALYSIS

TECHNICAL ANALYSIS
Mrs. P. Pirakatheeswari, Lecturer in Commerce,   Sri Sarada College for Women (Autonomous), Salem -16.

INTRODUCTION

 Technical Analysis as a study of the stock market considering factors related to the supply and demand of stocks. Technical Analysis doesn’t look at underlying earnings potential of a company while evaluating stocks (unlike fundamental Analysis).  It uses charts and computer programs to study the stock’s trading volume and price movements in the hope of identifying a trend. In fact the decision made on the basis of technical analysis is done only after inferring a trend and judging the future movement of the stock on the basis of the trend.

 In finance, technical analysis is a security analysis discipline for forecasting the direction of prices through the study of past market data, primarily price and volume.

 Assumptions

Technical Analysis assumes that the market is efficient and the price has already taken into consideration the other factors related to the company and the industry.

It is because of this assumption that many think technical analysis is a tool, which is effective for short-term investing.
History

The principles of technical analysis derive from the observation of financial markets over hundreds of years. The oldest known hints of technical analysis appear in Dutch markets in the 17th century. In Asia, the oldest example of technical analysis is thought to be a method developed during early 18th century which evolved into the use, and is today a main charting tool.

Dow theory is based on the collected writings of modern technical analysis from the end of the 19th century.  Many more technical tools and theories have been developed and enhanced in recent decades, with an increasing emphasis on computer-assisted techniques.  Technical Analysis as a tool of investment for the average investor thrived in the late nineteenth century.

General description

Technical analysts seek to identify price patterns and trends in financial markets and attempt to exploit those patterns. While technicians use various methods and tools, the study of price charts is primary.  Technicians especially search for archetypal patterns, such as the well-known head and shoulders or double top reversal patterns, study indicators such as moving averages, and look for forms such as lines of support, resistance, channels, and more obscure formations such as flags, pennants, balance days and cup and handle patterns.  Technical analysts also extensively use indicators, which are typically mathematical transformations of price or volume. These indicators are used to help determine whether an asset is trending, and if it is, its price direction. Technicians also look for relationships between price, volume and, in the case of futures, open interest.

Examples include the relative strength index, and MACD. Other avenues of study include correlations between changes in options (implied volatility) and put/call ratios with price. Other technicians include sentiment indicators, such as Put/Call ratios and Implied Volatility in their analysis.

Technicians seek to forecast price movements such that large gains from successful trades exceed more numerous but smaller losing trades, producing positive returns in the long run through proper risk control and money management.  There are several schools of technical analysis. Adherents of different schools (for example, candlestick charting, Dow Theory, and Elliott wave theory) may ignore the other approaches, yet many traders combine elements from more than one school. Some technical analysts use subjective judgment to decide which pattern a particular instrument reflects at a given time, and what the interpretation of that pattern should be. Some technical analysts also employ a strictly mechanical or systematic approach to pattern identification and interpretation.

Technical analysis is frequently contrasted with fundamental analysis, the study of economic factors that influence prices in financial markets. Technical analysis holds that prices already reflect all such influences before investors are aware of them, hence the study of price action alone. Some traders use technical or fundamental analysis exclusively, while others use both types to make trading decisions.  Users of technical analysis are most often called technicians or market technicians. Some prefer the term technical market analyst or simply market analyst. An older term, chartist, is sometimes used, but as the discipline has expanded and modernized the use of the term chartist has become less popular.

Characteristics

Technical analysis employs models and trading rules based on price and volume transformations, such as the relative strength index, moving averages, regressions, inter-market and intra-market price correlations, cycles or, classically, through recognition of chart patterns.  Technical analysis stands in contrast to the fundamental analysis approach to security and stock analysis. Technical analysis “ignores” the actual nature of the company, market, currency or commodity and is based solely on “the charts,” that is to say price and volume information, whereas fundamental analysis does look at the actual facts of the company, market, currency or commodity. For example, any large brokerage, trading group, or financial institution will typically have both a technical analysis and fundamental analysis team.  Technical analysis is widely used among traders and financial professionals, and is very often used by active day traders, market makers, and pit traders.

 In the 1960s and 1970s it was widely dismissed by academics. In a recent review, Irwin and Park reported that 56 of 95 modern studies found it produces positive results, but noted that many of the positive results were rendered dubious by issues such as data snooping so that the evidence in support of technical analysis was inconclusive; it is still considered by many academics to be pseudoscience. Academics such as Eugene Fama say the evidence for technical analysis is sparse and is inconsistent with the weak form of the efficient market hypothesis. Users hold that even if technical analysis cannot predict the future, it helps to identify trading opportunities.

In the foreign exchange markets, its use may be more widespread than fundamental analysis. Recent research suggests that combining various trading signals into a Combined Signal Approach may be able to increase profitability and reduce dependence on any single rule.

Principles

Technicians say that a market’s price reflects all relevant information, so their analysis looks at the history of a security’s trading pattern rather than external drivers such as economic, fundamental and news events. Price action also tends to repeat itself because investors collectively tend toward patterned behavior – hence technicians’ focus on identifiable trends and conditions.

How is Technical Analysis done?

Technical Analysis is done by identifying the trend from past movements and then using it as a tool to predict future price movements of the stock. It can be done by using any of the following methods:

a) Moving Averages—This method is used to predict the trend and specify various support and resistance levels in the short and long term period. Most commonly used moving averages are 30 DMAs and 200 DMAs. Where DMA means Days Moving Average.

b) Charts & Patterns—Some analysts’ uses charts and patterns to decide on the trend and then judge the future movement. The tool used by such analyst is converting the chart in one of the many form of many shapes commonly formed by stocks.

 Role of Volume: Volume plays a key role in deciding about the kind of future movement in stock. Whenever there is a sudden rise in the volume of the stock and if it is not followed by a price fall, it is a sign of consolidation and that the price may rise in near future. Generally if any stock breaks any trend it is accompanied by huge rise in volume.

In case of range bound trend the volume tends to die down to a great extent. Smart investors uses technical analysis to judge the rise in volume and take early positions in the stock during breakthroughs

 Volume-based indicators

Accumulation/distribution index — based on the close within the day’s range
Money Flow — the amount of stock traded on days the price went up
On-balance volume — the momentum of buying and selling stocks
PAC charts — two-dimensional method for charting volume by price level
Prices move in trends

Technical analysts believe that prices trend directionally, i.e., up, down, or sideways (flat) or some combination. The basic definition of a price trend was originally put forward by Dow Theory.

Types of trends: Trends can be classified broadly in 3 types. They are:

a) Uptrend: – Generally a stock moves in any direction with phases of consolidation or moving against the trend for a short period. But still it creates a higher Highs and Lows in case of an uptrend. In short each short rally will create new High for the stock.

b) Downward: – In this case as against Uptrend the stock creates lower Highs and Lows. Furthermore in case of Downtrend the fall is much more steeper than the rise in case of Uptrend.

c) Range-bound: – In case of such a trend the price moves in a small range for the long period. There is no apparent direction as far as trend is concerned in this case.

Charting terms and indicators
Types of charts
OHLC “Bar Charts” — Open-High-Low-Close charts, also known as bar charts, plot the span between the high and low prices of a trading period as a vertical line segment at the trading time, and the open and close prices with horizontal tick marks on the range line, usually a tick to the left for the open price and a tick to the right for the closing price.
Candlestick chart — Of Japanese origin and similar to OHLC, candlesticks widen and fill the interval between the open and close prices to emphasize the open/close relationship. In the West, often black or red candle bodies represent a close lower than the open, while white, green or blue candles represent a close higher than the open price.
Line chart — Connects the closing price values with line segments.
Point and figure chart — a chart type employing numerical filters with only passing references to time, and which ignores time entirely in its construction.
Concepts
Resistance — a price level which acts as a ceiling above prices
Support — a price level which acts as a floor below prices
Breakout — the concept whereby prices forcefully penetrate an area of prior support or resistance, usually, but not always, accompanied by an increase in volume.
Trending — the phenomenon by which price movement tends to persist in one direction for an extended period of time
Average true range — averaged daily trading range, adjusted for price gaps
Chart pattern — distinctive pattern created by the movement of security prices on a chart
Dead cat bounce — the phenomenon whereby a spectacular decline in the price of a stock is immediately followed by a moderate and temporary rise before resuming its downward movement
Elliott wave principle and the golden ratio to calculate successive price movements and retracements
Fibonacci ratios — used as a guide to determine support and resistance
Momentum — the rate of price change
Point and figure analysis — A priced-based analytical approach employing numerical filters which may incorporate time references, though ignores time entirely in its construction.

Who uses Technical Analysis?

Investors for their short-term trading decisions use Technical Analysis. This short-term may be further divided in day trading, short-term investment and for hedging purposes.  The role played by Technical Analysis in each case is as follows:

1) Day Traders: A day trader is one who takes and squares off his position both on the same day. Mostly a day trader counts on turnover rather than margin. A day trader will interpret the market movement.

2) Short term investors: These people form the biggest clientele base of both the brokers and the Technical Analyst.

3) Hedgers: These are generally big investors, who have lot of money at stake and hence they look to have some hedging of their risk. The strategy followed by this section of investors is that they compare the stock in consideration with the index and on the basis of the result of this comparison they take their position in the stock.

Conclusion

If we use only technical analysis in itself and do not consider other aspects it is very unlikely that we will have much success in the long run, particularly in case of short-term investments. But if we use Technical analysis along with fundamental analysis or discount the industry and company related news while considering the valuation, our chances of minimizing the risk brightens.

One thing that we must realize is that technical analysis provides us only with the trend and judge future on that basis, it can be far from actual in few cases. By no imagination and no analysis one could have guessed the same or rather have come closed to it. Therefore the best use of technical analysis is to realize the trend and levels at which it will break the trend so that one is prepared to take positions when such trend breaks. It is because of this disadvantage that Technical analysis more useful only for short-term investing…

 References:

1.Security Analysis and Portfolio management: D.E.Fisher & R.J.Jordon

2.http://www.datek.smartmoney.com

3.http://www.tradersedgeindia.com

4. http://www.deanlebaron.com

5. http://www.stockcharts.com

6.http://www.nseindia.com

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Sanefx Indicator

Sanefx Indicator

SaneFX now incorporates the unique Gold Trade Pro trade arrows to show exactly when to open trades and reduces your losing trades considerably. It now therefore expands on the unique and successful TCCI indicator system of the original SaneFX to give one powerful and versatile package to expand your trading world.
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SaneFX makes use of the unique TCCI indicator. This shows us the trend the moment it starts and allows us to trade in the right direction using the 1 minute charts, the 5 minute, the 15 minutes charts, the 30 minute charts, the hourly charts and the daily charts for gold and almost any currency pair. The Gold Trade Pro trade indicator arrows show when the indicated trend is likely to be strong and profitable – allowing you to make many more successful trades.

It is possible to trade off the daily chart to make big pips working for just 2 minutes a day or, scalp from the 1 minute charts or day trade from 30 minute charts.

Gold is primarily traded from the 30 minute and 4 hour charts, the later meaning that very little time is required to watch the screen – particularly with the audible alert.
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The SaneFX indicators give you the simplest trading methods imaginable – one indicator tracks along with the candles and turns from green to red depending on the trend, the other produces trade arrows. Red, we sell; green we buy! Beginners will get good results right away but skill and experience can greatly improve profits.

Of course, we need to know which instruments can be successfully traded using this method and we need to know the best times for trading. SaneFX is a complete system with a fully illustrated guide showing exactly how to use the unique trend indicators to best effect on numerous instruments and on several time frames. It will revolutionise your trading and bring in consistent profits like never before. Comes with an audible alert.

Having taught many traders the basics of Forex trading, I have also included comprehensive instructions for complete beginners, covering everything you need to know about Forex trading including opening an account, choosing a broker and the all-important psychology of trading and money-management.

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