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Technical Analysis

The Hidden Strengths of Volume Analysis (part 1)

ideas man 150The power of correct volume analysis cannot be overlooked. Unfortunately the ability to read volume correctly is not readily discussed or freely available. Off-the-cuff remarks such as, “increased volume on advances is bullish and increased volume on declines is bearish” are bantered around but that’s as far as it goes. The correct use and application of volume can make for some quite startling insights into price action, especially when one is swing trading or leaning against support and resistance points or zones of confluence.

I set up my charts with a couple of extra volume measures. I use a normal volume histogram that can be found with almost all software packages. However, if there is a larger volume spike skewing the ability to read the volume properly I will edit the data accordingly. Next, I add a 10-day moving average of the volume.

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The Hidden Strengths of Volume Analysis (part 2)

Ideas 400In the last article I discussed two examples of how and why volume can show the changing face of supply and demand. When the order of supply and demand is change we will get a change in market direction, sometimes a significant change in trend or otherwise some degree of retracement of the prior move. We will now continue on from that discussion and show larger periods of transition which can lead to quite substantial turning points in the major trends. These can be easy to identify, but do require some patience. If you did not read the prior article it would now be worth reviewing that before going on.

Let’s firstly take a look at AWB Limited.

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Technical Analysis: Essential Exit Rules

computer phone man redWhen new participants enter the speculative arena, most time is generally spent using technical analysis to look for a high probability entry technique. Technical analysis is the use of price, volume and chart patterns to make trading and investment decisions. Amateur traders believe that with a ‘sure-thing’ entry technique, profits are sure to follow. This could not be further from the truth. I’m sure you realize that the ‘Holy Grail’ does not exist and yet, how many hours do you currently spend looking for that perfect entry or indicator?

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How to Design Stock Market Trading Systems

design trading systemsStock market trading systems are often touted by slick sales spruikers at expos and in the media. These spruikers are selling a dream, a "get rich quick" scheme via their stock market trading systems that are apparently so simple that anyone can make millions and sit back on a beach with their laptop trading the markets - yes, even you! (BTW - that's you in the tree.) However, the reality is that these trading systems were designed for someone else, not you. The system may not suit your personality, risk appetite (to achieve the amazing results they spruik generally requires massive levels of risk) or lifestyle (do you have the time to sit in front of a computer all day punting?) So let's get real. Stock market trading systems can be designed by anyone. Let's start at the beginning and see how it's done. Many beginners, when learning to trade, are told to create or develop a trading plan.

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Technical Analysis Does the Hard Work

Nick arms folded flipInvestment Talk with John Hallows Sunday Telegraph, 27th November 2005
Over the years I’ve has a lot of fun being rude about technical analysis – to give what’s usually called “charting” its proper name. What always sparks my doubt is that the markets generally rise or crash as a result of outside, non-market events, which market graphs can’t predict, whatever enthusiastic chartists suggest. But now I have to haul up the white flag on this long-cherished position.

I’ve finally found someone who makes sense with technical analysis. And he spells out two important points that every direct share investor should know about. This light on the M4 to Damascus was shone by Nick Radge, a one-time Macquarie Bank Associate-director who’s still under 40 and lives comfortably in Noosa, playing the active investor on the markets and the charting guru for clients. His first principle should strike chords with finance professionals as well as normal investors.

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