The candlestick way of technical analysis traces its roots to Japan from where it originated and now is very popular and used worldwide. Several patterns of candlestick exist on paper as well as on ancient Japanese texts that throw in depth light on the theory and fundamentals of it. It is said that in the seventeenth century the rice trade carried out by the Japanese was done through such form of technical analysis. In 1900, Charles Dow supposedly used this as the basis to create a modern United States version of candlestick technical analysis. But the real credit of this charting process is bestowed upon Homma, a rice trader hailing from a place called Sakata.
This method is quite useful to get accurate low, high, close, open prices in a given timeframe. While the shadow of the candle, depicts low and high price points, its body the opening and closing prices. Some kind of shading is done to which way the price is going. If the candle is shaded going downwards, it means that the price at which a stock closed, was lower than what it opened up to. Similarly, a candle shown shaded upwards shows the opposite. It depicts that the opening price was lower than the closing price. Candlestick technical analysis has lots of variations which are used by different people according to their convenience. Like variation of patterns, of colors used for shading.
In the current times, a stock trader needs to be acting as a candlestick technical analyst as well. This is to correctly gauge and understand prices of stock better. Nowadays, there is software also available in the market which does the job of this analysis for the stock trader. It analysis better, accurately and gives several options to the user like of shading, of different patterns that can be used.
Technical analysis is a huge trend in the stock markets worldwide. For sustainment and survival of any trader here, one has to ingrain technical analysis into his/her businesses. Candlestick technical analysis in one of the most important components of technical analysis for the features it has and for the way it understands the mind of the trader.
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Numerous investors believe in and use the principles of technical analysis. In fact, large brokerage houses provide extensive support for technical analysis and a large part of the discussion related to capital markets in the media is based on a technical view of the market.
Technical analysis observes historical price movements of the stock market and individual securities and develops a variety of models and technical trading rules such as moving averages, regression analysis and relative strength index to predict future market behavior. By taking into account price and volume changes, technical analysis comes in sharp contrast with fundamental analysis, which suggests that past performance has no influence on future performance or market values. Technical analysis involves the observation of past market data to estimate future market trends and therefore an investment decision using the market itself to predict its future performance.
To predict future behavior, technical analysts use several underlying assumptions that lead to this view of price movements. First of all, technical analysis assumes that the market value of any good or service is determined solely by the interaction of supply and demand. This assumption is universally accepted by both technical and fundamental analyst as it constitutes a basic theory in economics. The price of any security is determined by the interaction of supply and demand.
The second assumption of technical analysis is that supply and demand are driven by a variety of rational and irrational factors. In these factors are also included economic variables that fundamental analysts recognize as determinants of market corrections, but also factors such as opinions, moods and guesses that actually shape trends which are fundamental in technical analysis. In regards to this second assumption, most observers acknowledge that supply and demand are driven by numerous variables that cannot be separated and the market has to continually and automatically weigh all these factors and reflect them in the stock price.
The third assumption of technical analysis is that the prices of individual securities and the value of the market as a whole have the tendency to move in trends, which persist for considerable lengths of time. These prevailing trends tend to adjust to changes in supply and demand. Technical analysts assume that stock prices move in trends that persist for long periods because they consider that new information enters the market over a period of time and not at once. This gradual pattern of information occurs as various groups of securities professional to the average investor receive gradually the information and or sell the stocks accordingly, moving the price accordingly and gradually reaching a new equilibrium. Therefore, technical analysis is based on a gradual price adjustment that reflects the gradual flow of information into the market.
There are numerous technical trading rules and a range of interpretations for each of them. Technical analysts, in majority, watch many alternative rules and decide on a or sell decision based on a consensus of the signals because it is rare to achieve complete agreement of all the rules. Many technical analysts assume that investors are wrong as the market approaches peaks and lows and they try to determine when the majority of investors are either bearish or bullish and trade in the opposite direction. In technical analysis, this is known as contrary-opinion rules. Another set of rules such as the Confidence Index, and the T-Bill Eurodollar Yield Spread follows the behavior of sophisticated investors and are widely known as the follow-the-smart-money tactics. Finally, there are momentum indicators such as the 200-day moving average, and the breadth of market, as well as stock price and moving techniques such as relative strength, moving-average lines, bar charting, resistance levels, and point-and-figure charts that are used to make aggregate market decisions based on rising and declining trend channels.
Overall, technical analysis is applied to both domestic and global capital markets and can also be used to analyze currency exchange rates and determine the prevailing sentiment in the bond market.
A freelance writer, top MBA graduate with Finance major, passionate about business, finance, history and music; this is pretty much me in a nutshell.
I provide high quality writing services since 2005 in the field of Business & Finance, Movie Reviews, Book Reviews, Health & Fitness, Internet and Relationships. I also have a very good knowledge of Politics and History.
My advanced familiarity with financial modeling, financial statement analysis, capital budgeting and market research has helped me a lot, not only to be a successful professional, but mostly to see life under a more creative and innovative perspective. Besides, having lived for two years in Chicago, IL and Boca Raton, FL and for quite some time in Paris, France has provided me with an international aspect and has enlarged the way I see and understand life.
I currently work as a financial and investment advisor at an international financial institution. Yet, my dream is to be able to make a living as a writer.
In this article, I will give you a whole new perspective in saving money in investing & trading. We are not talking about which stock or which stock chart to sell here but we are simply examining the how-to process in investing and trading.
In today’s situation, investors often get lost in the sea of information – of news, financial reports, investment blogs, etc. – they are eager to know what to and what to sell and thus they ignore the basic setup of their trading platform that could save hundreds if not thousands of ringgit.
They forgot by buying few stocks here and a few stocks there you are wasting money by not focusing or concentrating on your investment, not to mention the brokerage commissions. Here are a few things you can do to save money in trading and investing.
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1. Invest in a quality investment & stock trading education.
A quality investing and trading course should teach you to understand of the stock market dynamics and company fundamentals. Both technical analysis and fundamental analysis plays a big part in filtering which stocks are good to and sell. For many years, large financial institutions and top notch professionals have been using these approaches and with great success. Shouldn’t you following suit?
Be careful of get-rich-quick investing and trading courses that claim after you have completed their program, you can make tons of money immediately. I believe you need to put some effort to be successful by modelling after their given system.
Remember, there are no shortcuts to success!
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2. Shop for Best Service with competitive price online trading broker.
Online trading and investing has made our life very simple and easy. They are now hassle-free and cheap compared to the older method of over-the-telephone buying and selling . The online broker must provide real time stock quotes, stock charts & trading information; stock counters financial report, trading account statement, etc. Look for those who have a customer service desk to answer all your queries in case your mouse click gets you no response.
It is a good idea to have more than two to three online trading brokers to compare their level of services, commissions and online trading features before finally deciding to a minimum two brokers. For me, I have two online brokers, one for backup.
Do not look for the cheapest online trading broker. Look for quality online trading brokers.
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3. Look for a portfolio of few stocks to invest or trade.
Average investors often dilute their investment by diversifying into too many stocks. How many is too many? I believe if you have own more than 6-8 stocks, you are not paying attention to your portfolio and thus wasting money. Unless you are professional, retired or between jobs, if you have more than 8 stocks, you have too many to follow up and often get confused. A portfolio of 3-5 stocks is ideal for an average investor to follow and allows maximum attention. In the investment context, too many stocks simply require too many decisions to be made thus wasting time and money.
About the Author.
Mr. Martin Wong is a trading and investing coach based in Kuala Lumpur, Malaysia. His email is martin_tf_wong@hotmail.com with questions or comments about this article or your personal trading performance questions. He conducts investing and trading seminars in Kuala Lumpur. Goto http://www.traderstruthrevealed.com/programs/seminar
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For the third year, CSG has been featured in Culinology as a key contributor to the Recipe Redux section. This special section is designed to take the reader through the process that the formulator follows from taking a Gold Standard recipe to the plant manufacturing process and how the conversion of that recipe takes place. The feature includes what ingredients and functional foods get converted, added to, or changed over from the Gold Standard to the formula. The result is a plant-ready and manufacturable product ready for consumption for in marketplaces ranging from restaurant chain level to supermarket retail.
The 2006 issue included Seafood Jambalaya and Jasmine-Honey Tea with a High-Fiber, Low-Fat Granola Fruit Bar and Raspberry Foam. This issue took a slightly different perspective, as in addition to converting the recipe to a plant-ready formula, CSG made these classic fat and calorie laden recipes into “Better for You” recipes.
For the third year, CSG has been featured in Culinology as a key contributor to the Recipe Redux section. This special section is designed to take the reader through the process that the formulator follows from taking a Gold Standard recipe to the plant manufacturing process and how the conversion of that recipe takes place. The feature includes what ingredients and functional foods get converted, added to, or changed over from the Gold Standard to the formula. The result is a plant-ready and manufacturable product ready for consumption for in marketplaces ranging from restaurant chain level to supermarket retail.
The 2006 issue included Seafood Jambalaya and Jasmine-Honey Tea with a High-Fiber, Low-Fat Granola Fruit Bar and Raspberry Foam. This issue took a slightly different perspective, as in addition to converting the recipe to a plant-ready formula, CSG made these classic fat and calorie laden recipes into “Better for You” recipes.