Stock Technical Analysis Course and Various Trading Methods At no time has something been seen like all these various methods which are coming on stream for the use in forecasting commodity prices . There are literally hundreds of techniques and approaches . Here we'll only briefly look at a few . Some of them are rather conventional and I'll put an asterisk by those I use personally . Within this chapter there are approximately thirtysix ways and means of forecasting prices . This does not take into consideration the various great tidbits that can be provided through a P&L charting technical analysis course. ( P&L charting makes this author happy , because it allows the ability on a daily and intra day basis to quantify price action . I know of no other system wherein each day's specific activity means more than the trend or congestion in the way trading prices are going . With P&L charting every day's activity can show the evolution of a congestion or trend, in some cases, in a day. ) Actually, this author is most irritated by traders that think that their resistance index, moving averages, point and figure, volume oscillator , and who knows what else, basis, cash , are the only system which is effective. And, that the system that they are using is the only one that will ever be effective and they never have any real use for volume, open interest, seasonals, fundamentals, contrarian opinion, wave theories, point and figure, moving averages, oscillators, chart patterns, momentum indices, whatever , and are blindfolded to the evolution of anyone else's approach . ( Okay . I was able to get that out.) Many times these traders do not even use their own systems and to me it seems, to always be fighting the market . Assuming a trader has studied a technical analysis course and they have a plan for trading that combines various price forecasting methods and he puts them together in a way he can get trade profits on a regular basis , then listening to this trader is a good idea . In the section below that is on planning, this author will succinctly portray his approaches to the market place and the flexibility may surprise you . In order to analyze commodity price behavior on the market, there are 3 methods . 1. fundamental 2. mechanical 3. technical FUNDAMENTAL Often the market ends up going opposite of considerations that are fundamental due to factors like technical ones. Fundamental traders are interested in the price movements that are long range and must be prepared to wait it out . Fundamentalists may deny it , but the external factors you have to consider are too many, like the response that occurs to influences that are fundamental, reflected in the day by day fluctuations . So for analysis, there is now reason to seek them out .
MECHANICAL The mechanical methods use price and price alone to decide on the action they should use and the trader doesn't have to decide on the action. There are three mechanical methods . 1. chart 2. computer summaries 3. moving averages Learning from a technical analysis course will teach that you should faithfully follow the trading rules and it is usually based on some mathematical formula to predict the right time to trade . The computer tells you what a mathematical formula thinks you should do . One of the great things about using the mechanical method is they can be back checked . Methods that are computer oriented is usually biased toward the analysis of a mathematical trend, using different trading systems, such as moving averages. Your computer can become a chart reader and it can formulate and test any and all decision rules . TECHNICAL In past decades, a vast amount of work has been done to erect a means of technical tools , all aiming to anticipate futures prices from the statistics of trading , for example, volume, O.I. and price . The technical approach from the simplest to the most complex and esoteric falls into four broad areas . 1) patterns of the price charts 2) trend following methods 3) character of market analysis 4) structural theories. For charting, there are a variety of methods . The following are the most popular : a. bar charts for high/low/close each day b. point and figure methodology c. the average that moves of the prices at closing Technical analysis lists of various approaches can be cataloged by these approaches that are technical . 1) reading of tape or board 2) analysis of price charts which consists of a. the price and its trends b. support as well as resistance c. consolidation ( continuation and reversal ) d. price formations and patterns e. the measurement rules f. wave theory 3) open interest analysis and volume 4) various indicators that are technical which can include : a. relative performance measures b. studying the periodic price performance c. contrary opinion and opinion survey
Later there will be more discussion of this.
Author: Charles Drummond is a Canadian trader who has written nine books about trading and has created a stock technical analysis course called “Drummond Geometry.” His biography and further information about his work can be found at the stock technical analysis course website.