Sharing Knowledge in Smallcaps

[KauaiPI]

Ergo Sum thanks for the links! I planned on spending the weekend pulling up some archived TA items including shooter's help on COST. I work better when I have a picture to compare the comments to like street posted a few days back. What I do have in my TA research I will post here for others struggling as I am lol

Still don't know what a doji is ~grin!
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(from BTS)

Ten Points For Beginning Technical Traders

This is part of a larger Technical Analysis site provided by Equity Analytics, Ltd. Technical indicators can be quite confusing to the trader who is not used to using them.

The first thing I always recommend to anyone is to read as much as you can.

Second, you have to be comfortable with the indicators you choose to use. Start out with the basic indicators like moving averages, RSI, and stochastics. When you get comfortable with those, move on and try to learn how some other indicators work. By the way, I find that the basic indicators which have been around for years seem to work the best. These are moving averages and RSI. There are literally hundreds of indicators around. Most of them aren't worth 2 cents. Technicians spend hours writing new formulas for indicators which may or may not give good results. We are always looking for an indicator which will provide us with better predictive results. And there are quite a few people out there making a lot of money selling these indicators and systems.

Third, paper trade with the indicators you're using first with daily data. Make sure that you try to simulate real trading as closely as possible. To do this, evaluate your selections in the evening using end of day data. Pick the securities you want to trade and pick the prices you want to either go long or short. Pick the exact prices at which you will enter the trade. Set stop loss levels at that time and stick with them. If the trade moves in your direction and becomes profitable, move your stops up (trailing stops) and stick with them. Hold the stocks until you do get stopped out. Keep accurate records. Records are crucial. This process may take a couple of months. But it will be well worth the effort. Done right, you will get a good feel for the indicators and systems you're using; and you will see how well your indicators and systems are working.

Fourth, don't even think about day trading until you can trade end of day profitably. Day trading is the hardest type of trading there is. It's incredibly difficult and nerve racking. And if you're making money trading end of day, why bother day trading. Profitable traders are far outnumbered by losing traders.

Fifth, experiment with different indicators and their inputs. You may come up with something that works for you. And that's the key to any indicator. The indicator can be the best in the world, but if it doesn't work for you, it's no good. Find one or two that work for you and stick with them.


Sixth, if you're working with systems, don't over-optimize the system. No system is going to work 100% of the time. If you can get a system to work in real time somewhere between 60% to 70% of the time, and you cut your losses early, you will make money. I have a friend who has a system which produces winners just 40% of the time. Out of ten trades, he has six losers. But he is able to cut his losses early. At the end of each year he's turned a nice little profit. I can turn any system into what looks like a winner by backtesting it and fitting it to the markets it's analyzing. However, it will never work in real time. After you optimize a system, test it on paper first and see if it is working in real time. Then trade it.

Seventh, if you don't feel like trading, don't trade. The worst thing a trader can do is trade when he doesn't feel like it. The next worst thing a trader can do is make a trade which he isn't sure is going to be a winner. A trader has to be confident that every trade he makes is going to be a winner. They're not all going to be winners. But you have to have confidence in your judgment.

Eighth, read all you can. There is an extensive bibliography in this web site. Take advantage of it. Start with some of the easier books and then move on to the journals which deal with some advanced theory on investing. Reading is one of the more important things a trader can do. The more you read and absorb, the better able you are to evaluate different strategies and tactics. Further, the more you read, the better able you will be to evaluate the more basic strategies. Keep pressing to learn more and more. The more you learn the more you will realize there is to learn. There's much more to trading than picking a couple of indicators and trading.

Ninth, you should have a working knowledge of fundamental analysis. Despite the fact that you might be a technician by choice, a trader should have a good feel for the financial dynamics of an organization and be able to read balance sheets, income statements, statements of changes in financial position, and so forth. And he should be able to understand the formulas which indicate the financial shape of a corporation (i.e. quick ratio, accounts receivable turnover, price/earnings, etc.).

Tenth, beginning traders have a tendency to listen to an analyst on television with charts and graphs, and fancy indicators on them, give his opinion on a security or an index, and then trade based on their analysis. I never trade based on someone else's analysis. They may be of a different opinion than you. Who's right. Only time will tell. However, if your analysis of the same security or index is sound, your opinion is just as valid as their opinion.

TA INDICATOR GLOSSARY part 1 [Yahoo! Clubs: Beat The Street Traders Club]

Glossary of Technical Analysis Indicators

Bollinger Bands

These are fixed lines drawn above and below a moving average of price and the width of the band varies with the volatility of the underlying security. Bands widen when the volatility of the security increases and contract when volatility decreases. The time period for the moving average can vary but John Bollinger recommends 10 days for short term trading, 20 days for intermediate trading and 50 days for long term trading.

When prices break through a band it usually indicates that the move is strong enough to continue further and sharp moves tend to occur when bands tighten. After hitting a band and not penetrating it the moving average of price will often be the next support or resistance area. For a more detailed discussion of Bollinger Bands please see <http://www.e-analytics.com/bolinger.htm


On Balance Volume (OBV)

OBV is a very popular indicator developed by Joseph Granville and is a running total of volume that reflects accumulation or distribution. Each day's volume is assigned a positive or negative value depending on whether prices closed higher or lower that day and a running total is kept by adding or subtracting the volume depending on the direction for
the day. The direction of the OBV line is the thing to watch not the actual level. This indicator will often confirm underlying strength or weakness of a price trend and will often signal a top by declining while the stock is still rising, indicating big money is leaving the stock.

Conversely, a rising OBV in the face of a declining price trend or an OBV that refuses to confirm a new stock reaction low could indicate smart money is moving in and a bottom may be at hand.


TA INDICATOR GLOSSARY part 2 [Yahoo! Clubs: Beat The Street Traders Club]

Stochastic

The Stochastic is a momentum oscillator developed by Dr. George Lane.

The premise behind the Stochastic indicator is that when a stock is rising it tends to close near the high and a falling stock closes near it's low and this is plotted as two lines, the fast stochastic (%K) and slow stochastic (%D). A bullish signal occurs when the %K rises through the %D when it is below 20. A bearish signal occurs when the %K goes under
the % D above 80. Dr. Lane believes the most important signal occurs when the %D and stock price diverge. This is often seen when a stock makes a new high and the %D clearly fails to reach or better it's old high.

Conversely, a stock is oversold and ready to reverse when it makes a new low but the %D fails to confirm that low.

MACD

The MACD was developed by Gerald Appel, publisher of Systems and Forecasts and is a trend-following momentum indicator that shows the relationship between two moving averages of prices. The MACD is most often the difference between a 26-day and a 12-day exponential moving average. A 9-day exponential moving average of the MACD, called the "signal" (or "trigger") line is plotted against the MACD to show buy/sell opportunities.

The basic MACD trading rule is to sell when the MACD falls below its signal line. Similarly, a buy signal occurs when the MACD rises above its signal line. It is also popular to buy/sell when the MACD goes above/below zero.
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Old TA referrence from the North board

http://ragingbull.lycos.com/mboard/boards.cgi?board=NORTH&startfrom=&numposts=30&board=N... May 29, 2001
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T/A Links:
What is Technical Analysis
OverviewWhy Analyze Securities? <http://stockcharts.com/education/What/Overview/analyzeSecurities.html
A Random Walk
<http://stockcharts.com/education/What/Overview/randomWalk.html
Technical Analysis Part 1<http://stockcharts.com/education/What/Overview/techAnalysis1.html
Part2
<http://stockcharts.com/education/What/Overview/techAnalysis2.html
Fundamental Analysis Part 1
<http://stockcharts.com/education/What/Overview/fundAnalysis1.html
Part 2
<http://stockcharts.com/education/What/Overview/fundAnalysis2.html
Indicator AnalysisIntroduction to Indicators
Part 1 <http://stockcharts.com/education/What/IndicatorAnalysis/indicators1.html
Part 2
<http://stockcharts.com/education/What/IndicatorAnalysis/indicators2.html
Part 3
<http://stockcharts.com/education/What/IndicatorAnalysis/indicators3.htmlPart 4
<http://stockcharts.com/education/What/IndicatorAnalysis/indicators4.html
Accumulation/Distribution Line
<http://stockcharts.com/education/What/IndicatorAnalysis/indic_AccumDistLine.htmlAverage Directional Index (ADX)<http://stockcharts.com/education/What/IndicatorAnalysis/indic_ADX.html
Bollinger Bands
<http://stockcharts.com/education/What/IndicatorAnalysis/indic_Bbands.html
Commodity Channel Index
<http://stockcharts.com/education/What/IndicatorAnalysis/indic_CCI.html
Chaikin Money FlowPart 1
<http://stockcharts.com/education/What/IndicatorAnalysis/indic_ChaikinMoneyFlow1.html
Part 2
<http://stockcharts.com/education/What/IndicatorAnalysis/indic_ChaikinMoneyFlow2.htmlChaikin Oscillator
<http://stockcharts.com/education/What/IndicatorAnalysis/indic_ChaikinOscillator.html
The Elliot Wave Page: <http://www.wavechart.com/ MACDPart 1
<http://stockcharts.com/education/What/IndicatorAnalysis/indic_MACD1.html
Part 2
<http://stockcharts.com/education/What/IndicatorAnalysis/indic_MACD2.html
Part 3
<http://stockcharts.com/education/What/IndicatorAnalysis/indic_MACD3.htmlPart 4
<http://stockcharts.com/education/What/IndicatorAnalysis/indic_MACD4.htmlMoving AveragesPart 1
<http://stockcharts.com/education/What/IndicatorAnalysis/indic_movingAvg.html
Part 2
<http://stockcharts.com/education/What/IndicatorAnalysis/indic_movingAvg2.html
Price Oscillator <http://stockcharts.com/education/What/IndicatorAnalysis/indic_priceOscillator.html
Price Relative
<http://stockcharts.com/education/What/IndicatorAnalysis/indic_priceRelative.html
Rabbitt Q-StockRank
<http://rabbittanalytics.com/methodology.htm
Relative Strength Index (RSI)<http://stockcharts.com/education/What/IndicatorAnalysis/indic_RSI.html
Screens: <http://www.marketscreen.com/home/
Standard Deviation
<http://stockcharts.com/education/What/IndicatorAnalysis/indic_standardDev.html
Stochastic Oscillator
<http://stockcharts.com/education/What/IndicatorAnalysis/indic_stochasticOscillator.html
StochRSI<http://stockcharts.com/education/What/IndicatorAnalysis/indic_TRIN.htmlVIXhttp://stockcharts.com/education/What/IndicatorAnalysis/indic_VIX.htmlWilliams" target="_new">http://stockcharts.com/education/What/IndicatorAnalysis/indic_stochRSI.htmlTRINhttp://stockcharts.co... %R
<http://stockcharts.com/education/What/IndicatorAnalysis/indic_williamsR.html
Market AnalysisDow TheoryPart 1
<http://stockcharts.com/education/What/MarketAnalysis/dowtheory1.html
Part 2
<http://stockcharts.com/education/What/MarketAnalysis/dowtheory2.html
Part 3
<http://stockcharts.com/education/What/MarketAnalysis/dowtheory3.html
Elliot Wave Theory
<http://stockcharts.com/education/What/MarketAnalysis/elliotwavetheory.html
Trading Strategies John Murphy's Ten Laws of Technical Trading
<http://stockcharts.com/education/What/TradingStrategies/MurphysLaws.html
Gap Trading StrategiesPart 1
<http://stockcharts.com/education/What/TradingStrategies/gapStrategies1.html
Part 2
<http://stockcharts.com/education/What/TradingStrategies/gapStrategies2.html
The Pre-Holiday Effect
<http://stockcharts.com/education/What/TradingStrategies/preHolidayEffect.htmlThe "Last" Stochastic Technique<http://stockcharts.com/education/What/TradingStrategies/lastStochastic.html
Richard Rhodes' Trading Rules
http://www.investmentools.com/tutorials/techanalysis/ta1.shtml <http://stockcharts.com/education/What/TradingStrategies/TradingRules.htmlTools
Part 2
<http://www.investmentools.com/tutorials/techanalysis/ta2.shtml
Part 3
<http://www.investmentools.com/tutorials/techanalysis/ta3.shtml
Part 4
<http://www.investmentools.com/tutorials/techanalysis/ta4.shtmlPart 5
<http://www.investmentools.com/tutorials/techanalysis/ta5.shtml
Part 6
<http://www.investmentools.com/tutorials/techanalysis/ta6.shtml
Part 7
<http://www.investmentools.com/tutorials/techanalysis/ta7.








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