Introduction to Technical Analysis
By Curtis Baune
Stock Market Charting
What will we cover
How to use software to analyse the stock market.
Types of charts and trends.
Indicators of change.
- Part Gambling
- Part Guessing
- Part Research
- Part History
- Part Psychology
- Part Science / Math
The more You research, learn from history, study what others are doing, improve your math & science skills.
The less gambling and guessing you will be doing.
What skills are useful for you:
The Ability to learn from your mistakes
Having some patience
Ability to time travel or know the future!
What is Technical Analysis
Technical Analysis is the forecasting of future financial price movements based on an examination of past price movements. Like weather forecasting, technical analysis does not result in absolute predictions about the future. Instead, technical analysis can help investors anticipate what is “likely” to happen to prices over time. Technical analysis uses a wide variety of charts that show price over time.
What is a Stock
Plain and simple, a stock is a share in the ownership of a company. A Stock represents a claim on the company’s assets and earnings. As you acquire more stock, your ownership stake in the company becomes greater. Whether you say shares, equity, or stock, it all means the same thing.
Being an Owner
Holding a company’s stock means that you are one of the many owners (shareholders) of a company and, as such, you have a claim (albeit usually very small) to everything the company owns. Yes, this means that technically you own a tiny sliver of every piece of furniture, every trademark, and every contract of the company. As an owner, you are entitled to your share of the company’s earnings as well as any voting rights attached to the stock.
Dow said that share prices tend to move in trends and that trends tended to continue until a major force acted to stop them. Dow identified three types of trends.
•An uptrend is when each successive high point is higher than the previous high, and the low points on the price chart also rise progressively.
•A downtrend is the opposite situation. Each successive low point is lower than the previous one.
•The third trend is when both averages fluctuate within a range of about 4% of the same value. Commonly referred to as ‘trading sideways’, Dow called this a ‘line’.