Day trading strategies: the complete guide with all the advanced tactics for stock and options trading strategies. Find here the tools you will need to invest in the forex market

 Training 
Trading is a unique endeavor in that we spend more time in the market (that
is, game day) than in practice. Every other high-performance activity
requires a minimum of double the amount of time to be spent in practice
than in games. So how do you achieve this when it comes to trading?

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T
CHAPTER 5:
 
 
Technical Analysis
echnical analysis is a method of looking at stock charts and data in
order to spot price trends. It is a method primarily used by traders
who are interested in short term profits, but it can be helpful for
long-term investors as well. Long-term investors can use technical analysis
to determine (estimate) the best entry points into their positions. Note that
technical analysis certainly isn’t required, and most long-term investors
ignore short-term trends and use dollar cost averaging. Nonetheless, it’s a
good idea to become familiar with technical analysis in case you decide you
want to use it in the future.
Technical vs. Fundamental Analysis
Technical analysis is different than fundamental analysis. They could be but
aren’t necessarily related. Fundamental analysis is focused on the
underlying fundamentals of the company. These can include earnings, price
to earnings ratio for the stock, and profit margins. The technical analysis
ignores all of these things and is simply focused on the trades of the
moment. It seeks to discover upcoming trends in buying behavior. So
whether or not a company was profitable in the previous quarter – it doesn’t
necessarily matter. Of course, profitability can drive more stock purchases,
and so drive up the price. But many things can drive the price up or down
over the short term. Simple emotion can do it, and so traders that use

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technical analysis study the charts themselves and pay far less attention to
external factors or fundamentals.
Trend Seeking
The first thing that technical analysis seeks to discover is the trend. Simply
put, a trend is a prevailing price movement in one direction or the other.
The time period isn’t specific and will depend on the trader’s needs and
goals. For example, day traders are looking for a trend that might only last
two hours. Swing traders may hope to ride a trend that lasts weeks or
months. Position traders are looking for longer-term changes, and simply
want to enter a position at a low price and exit that position months or
between 1-2 years later at a higher price to take a profit.
Trends are easy to estimate, but your estimations have no guarantee of
being correct. For an uptrend, traders typically draw straight lines through
the low points of the gyrations of the stock on the graph. This will help you
estimate where the trend will end up at some future point in time. You can
use this to set a selling point when you exit your position.
In the following chart, we see the trend in JNK from April through October.