by Karma on November 11, 2010
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While there are innumerable software around to automate Technical Analysis and trading strategy… the chances are you won’t be able to find a ready-made code for the most basic concept in Technical Analysis: Support & Resistance.
Most codes around use zig-zag style function which has several flaws in it’s mathematical properties.
A proper code, which implements atleast basic Technical Analysis should have these five parts:
- Identification of all significant highs/lows
- Marking a price band around each significant hi/lo
- Marking a price band for important Fibonacci retracements
- Finding confluence of the bands marked in step 3 & 4
- Ranking each confluence level as L1, L2, L3,L4 etc. (resistance turns into support and vice-versa)
There are several nuances involved in each step.
The observation during this exercise that Support & Resistance levels actually exists provides the trader a premise about price behavior; this can than be developed as an edge.
Comments welcome.
by Karma on August 23, 2010
Someone who has been into the markets for 5+ years is likely to have gone through a large number of trading books. There are 1000+ titles from Wiley Finance alone. Here we will try to maintain a directory of the best 2-3 books on the a particular topic.
Technical Approach
- Evidence-Based Technical Analysis by David R. Aronson
- Time Series Analysis by James D. Hamilton
Technical Analysis Comprehensive
- Reading Price Charts Bar by Bar by Al Brooks
- Technical Analysis: The Complete Resource by Kirkpatrick
Chart Patterns
- Chart Patterns (Bloomberg Financial) by Bruce M. Kamich
- Encyclopedia of Chart Patterns (Wiley Trading) by Thomas N. Bulkowski
Price-volume Analysis
- Jesse Livermore’s Methods of trading in stocks by Richard D. Wyckoff
- http://www.wyckoffstockmarketinstitute.com/
- (forum) http://www.traderslaboratory.com/forums/f131/ [click to continue…]
by Karma on July 30, 2010
The adjective “random” is perhaps the most misused word pertaining to stock market. Although it is rarely the definition given, it is indeed something “made, done, happening, or chosen without method or conscious decision”.
Carl Menger begins his introduction to economics by: “All things are subject to the law of cause and effect. This great principle knows no exception, and we would search in vain in the realm of experience for an example to the contrary. Human progress has no tendency to cast it in doubt, but rather the effect of confirming it and of always further widening knowledge of the scope of its validity.”
Stock prices move up and down because people keep buying/shorting in hope to sell/buy at a better price. Several sciences study the causes of purposeful human action; so, it would be hard to argue any human action is uncaused. [click to continue…]
by daytrader01 on July 18, 2010
The aggregate trading stimulants/activity of large players create short-term patterns in stock price behavior, suggests a study entitled “Are You Trading Predictably?”. The Authors calculate returns over 13 half-hour intervals each day using intraday bid and ask prices for 4,494 U.S. stocks over the period of January 2001 through December 2009.
[click to continue…]
