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Stock Markets,
Trading Systems and
Technical Analysis Indicators

"Do not expect too much of the future, but also do not bother too much about the past!"
Chinese Proverb

One of the lessons that I learned about the market is that most of the times the simplest strategies are often the most profitable!

Although many investors use several technical indicators and charts, there is no guarantee they will ever be successful in the markets.

If all it took to succeed in the markets were the most sophisticated equipment and software, then those with that equipment would make the most money.

But in reality, it takes more than fancy equipment to be successful in the market.

Many people believe that if it isn't complicated, then it's not going to work.

I have learned from experience that the opposite is often true!

Keep your investing techniques so simple that even a young boy could understand them.

This will give you the opportunity to focus on what the market is telling you.

All it takes is a simple but successful strategy to turn you into a winning investor.

All Forecasts Are Wrong!

Stock Markets, Trading Systems and Technical Analysis Indicators

They differ in the extend of their wrongness, and it is usually possible to improve any forecast by gathering further relevant information or by processing in a more elaborate way, what is already known.

This costs money and time, the expenditure of which can only be justified if greater benefits can be obtained.

Technical analysis looks at the relationships that exist between a stock's price, its volume (the number of shares that trade hands during a single day), and other factors.

By using plotting and various mathematical models and analysis, technical analysts hope to be able to predict future changes in the price of a particular stock.

By looking for particular patterns on a price chart of a stock, for instance, technical analysts try to figure out the direction that the stock's price is likely to move in the future.

Many new traders have a tendency to confuse trading systems and technical analysis indicators.

The majority of the confusion comes in the form of confusing the use of technical analysis indicators with systems.

Technical Analysis Indicators

A technical analysis indicator is used to determine the trend of a market, the strength of the market and the direction of the market.

A technical analysis indicator may be specific or non-specific.

Some technical analysis indicators can be quantified in the form of an equation or algorithm. Others show up as patterns (e.g. head and shoulders, trendlines, support and resistance).

At some point, the technical analyst will receive a signal. This signal is the result of one technical analysis indicator or more than one technical analysis indicators in combination.

The signal indicates to the technical analyst a course of action (e.g. buy, sell, hold).

Stock Markets, Trading Systems and Technical Analysis Indicators
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Assumptions of Techical Analysis

   

   
 
 
 
 
 

 

 
 
 
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