FACTOID # 21: 15% of Army recruits from South Dakota are Native American, which is roughly the same percentage for female Army recruits in the state.
 
 Home   Encyclopedia   Statistics   States A-Z   Flags   Maps   FAQ   About 
   
 
WHAT'S NEW
 

SEARCH ALL

FACTS & STATISTICS    Advanced view

Search encyclopedia, statistics and forums:

 

 

(* = Graphable)

 

 


Encyclopedia > Technical analysis
Financial markets

Bond market
Fixed income
Corporate bond
Government bond
Municipal bond
Bond valuation
High-yield debt
Image File history File links Broom_icon. ... This article does not cite any references or sources. ... Download high resolution version (480x640, 110 KB)Blockade in front of NYSE. Picture taken in April 2004. ... The bond market, also known as the debit, credit, or fixed income market, is a financial market where participants buy and sell debt securities usually in the form of bonds. ... This article does not cite any references or sources. ... A corporate bond is a bond issued by a corporation. ... A government bond is a bond issued by a national government denominated in the countrys own currency. ... In the United States, a municipal bond or muni is a bond issued by a state, city or other local government, or their agencies. ... Bond valuation is the process of determining the fair price of a bond. ... In finance, a high yield bond (non-investment grade bond, speculative grade bond or junk bond) is a bond that is rated below investment grade at the time of purchase. ...

Stock market
Stock
Preferred stock
Common stock
Stock exchange
A stock market is a market for the trading of company stock, and derivatives of same; both of these are securities listed on a stock exchange as well as those only traded privately. ... For other uses, see Stock (disambiguation). ... A preferred stock, also known as a preferred share or simply a preferred, is a share of stock carrying additional rights above and beyond those conferred by common stock. ... Common stock, also referred to as common shares, are, as the name implies, the most usual and commonly held form of stock in a corporation. ...

Foreign exchange market
Retail forex
The foreign exchange (currency or forex or FX) market exists wherever one currency is traded for another. ... The Retail forex (Retail Currency Trading or Retail Forex or Retail FX) market is a subset of the larger Foreign exchange market. ...

Derivative market
Credit derivative
Hybrid security
Options
Futures
Forwards
Swaps
A derivatives market is any market for a derivative security, that is a contract which specifies the right or obligation to receive or deliver future cash flows based on some future event such as the price of an independent security or the performance of an index. ... // A credit derivative is a financial instrument or derivative (finance) whose price and value derives from the creditworthiness of the obligations of a third party, which is isolated and traded. ... Definition A hybrid security, as the name implies, is a security that combines two or more different financial instruments. ... In finance options are types of derivative contracts, including call options and put options, where the future payoffs to the buyer and seller of the contract are determined by the price of another security, such as a common stock. ... In finance, a futures contract is a standardized contract, traded on a futures exchange, to buy or sell a certain underlying instrument at a certain date in the future, at a specified price. ... This article does not cite any references or sources. ... For the Thoroughbred horse racing champion, see: Swaps (horse). ...

Other Markets
Commodity market
OTC market
Real estate market
Spot market
Chicago Board of Trade Futures market Commodity markets are markets where raw or primary products are exchanged. ... Over-the-counter (OTC) trading is to trade financial instruments such as stocks, bonds, commodities or derivatives directly between two parties. ... Real estate is a legal term that encompasses land along with anything permanently affixed to the land, such as buildings. ... Template:The Spot Market The Spot Market or Cash Marketis a commodities or securities market in which goods are sold for cash and delivered immediately. ...


Finance series
Financial market
Financial market participants
Corporate finance
Personal finance
Public finance
Banks and Banking
Financial regulation
Finance studies and addresses the ways in which individuals, businesses, and organizations raise, allocate, and use monetary resources over time, taking into account the risks entailed in their projects. ... This article does not cite any references or sources. ... There are two basic financial market participant catagories, Investor vs. ... Domestic credit to private sector in 2005 Corporate finance is an area of finance dealing with the financial decisions corporations make and the tools and analysis used to make these decisions. ... Personal finance is the application of the principles of finance to the monetary decisions of an individual or family unit. ... This article does not cite any references or sources. ... For other uses, see Bank (disambiguation). ... Financial supervision is government supervision of financial institutions by regulators. ...

 v  d  e 

"Technical analysis is the study of market action, primarily through the use of charts, for the purpose of forecasting future price trends.".[1] In its purest form, technical analysis considers only the actual price behavior of the market or instrument, based on the premise that price reflects all relevant factors before an investor becomes aware of them through other channels. A chart is a graphic representation of some data. ...


Technical analysis is widely used among traders and financial professionals, and some studies say its use is more widespread than is "fundamental" analysis in the foreign exchange market.[2][3] Academics such as Eugene Fama say the evidence for technical analysis is sparse and is refuted by the efficient market hypothesis,[4][5] yet some Federal Reserve and academic studies include evidence that supports technical analysis.[6][7][8] MIT finance professor Andrew Lo argues that "several academic studies suggest that…technical analysis may well be an effective means for extracting useful information from market prices."[9] Burton Malkiel argues, "Technical analysis is anathema to the academic world."[10] The foreign exchange (currency or forex or FX) market exists wherever one currency is traded for another. ... Eugene F. Fama. ... In finance, the efficient market hypothesis (EMH) asserts that financial markets are informationally efficient, or that prices on traded assets, e. ... Burton Gordon Malkiel (born August 28, 1932) is an American economist and writer, most famous for his classic finance book A Random Walk Down Wall Street (now in its 8th edition, 2003). ...

Contents

General description

Technical analysts (or technicians) identify non-random price patterns and trends in financial markets and attempt to exploit those patterns [11] While technicians use various methods and tools, the study of price charts is primary. Technicians especially search for archetypal patterns, such as the well-known head and shoulders reversal pattern, and also study such indicators as price, volume, and moving averages of the price. Many technical analysts also follow indicators of investor psychology (market sentiment). In economics and business, the price is the assigned numerical monetary value of a good, service or asset. ... Look up volume in Wiktionary, the free dictionary. ... The term moving average is used in different contexts. ... The intuitive feeling of the investment community regarding the expected movement of the stock market. ...

Example of Head and Sholders pattern getting it wrong

Technicians seek to forecast price movements such that large gains from successful trades exceed more numerous but smaller losing trades, producing positive returns in the long run through proper risk control and money management. Image File history File links Size of this preview: 800 × 494 pixelsFull resolution (853 × 527 pixel, file size: 34 KB, MIME type: image/png) My rationale is that any half decent chart maker is copyrighted so using a screenshot here is fine. ... Image File history File links Size of this preview: 800 × 494 pixelsFull resolution (853 × 527 pixel, file size: 34 KB, MIME type: image/png) My rationale is that any half decent chart maker is copyrighted so using a screenshot here is fine. ... Lets talk about risk control strategies, anyone with more information and willing to share, please do so. ... Money management deals with the question of how much risk a decision maker should take in situations where uncertainty is present. ...


There are several schools of technical analysis. Adherents of different schools (for example, candlestick charting, Dow Theory, and Elliott wave theory) may ignore the other approaches, yet many traders combine elements from more than one school. Technical analysts use judgment gained from experience to decide which pattern a particular instrument reflects at a given time, and what the interpretation of that pattern should be. Technical analysts may disagree among themselves over the interpretation of a given chart. A candlestick chart is a style of bar-chart used primarily to describe price movements of an equity over time. ... Dow Theory is a theory on stock price movements that provides a basis for technical analysis. ... The Elliott wave theory is the basis of a technical analysis technique for predicting the behavior and market trends in the stock market, invented by Ralph Nelson Elliott in 1939. ...


Technical analysis is frequently contrasted with fundamental analysis, the study of economic factors that some analysts say can influence prices in financial markets. Pure technical analysis holds that prices already reflect all such influences before investors are aware of them, hence the study of price action alone. Some traders use technical or fundamental analysis exclusively, while others use both types to make trading decisions. Fundamental analysis of a business involves analyzing its income statement, financial statements and health, its management and competitive advantages, and its competitors and markets. ... Economics (deriving from the Greek words οίκω [okos], house, and νέμω [nemo], rules hence household management) is the social science that studies the allocation of scarce resources to satisfy unlimited wants. ...


History

The principles of technical analysis derive from the observation of financial markets over hundreds of years.[citation needed] The oldest known example of technical analysis was a method used by Japanese traders as early as the 18th century,[citation needed] which evolved into the use of candlestick techniques, and is today a main charting tool.[12][13] This article does not cite any references or sources. ... (17th century - 18th century - 19th century - more centuries) As a means of recording the passage of time, the 18th century refers to the century that lasted from 1701 through 1800. ... A candlestick chart is a style of bar-chart used primarily to describe price movements of an equity over time. ...


Dow Theory is based on the collected writings of Dow Jones co-founder and editor Charles Dow, and inspired the use and development of modern technical analysis from the end of the 19th century. Modern technical analysis considers Dow Theory its cornerstone.[14] Dow Theory is a theory on stock price movements that provides a basis for technical analysis. ... Dow Jones & Company (NYSE: DJ), based in the United States is a publishing and financial information firm. ... Charles Henry Dow (November 6, 1851 – December 4, 1902) was an American journalist who co-founded Dow Jones & Company with Edward Jones and Charles Bergstresser. ... Alternative meaning: Nineteenth Century (periodical) (18th century — 19th century — 20th century — more centuries) As a means of recording the passage of time, the 19th century was that century which lasted from 1801-1900 in the sense of the Gregorian calendar. ...


Many more technical tools and theories have been developed and enhanced in recent decades, with an increasing emphasis on computer-assisted techniques. This article is about the machine. ...


Principles of technical analysis

Technicians say that a market's price reflects all relevant information, so their analysis looks more at "internals" than at "externals" such as news events. Price action also tends to repeat itself because investors collectively tend toward patterned behavior -- hence technicians' focus on identifiable trends and conditions.


Market action discounts everything

Based on the premise that all relevant information is already reflected by prices, technical analysts believe it is redundant to do fundamental analysis -- they say news and news events do not significantly influence price, and cite supporting research such as the study by Cutler, Poterba, and Summers titled "What Moves Stock Prices?" Fundamental analysis of a business involves analyzing its income statement, financial statements and health, its management and competitive advantages, and its competitors and markets. ... Lawrence Henry Larry Summers (born November 30, 1954) is an American economist and academic. ...

On most of the sizable return days [large market moves]…the information that the press cites as the cause of the market move is not particularly important. Press reports on adjacent days also fail to reveal any convincing accounts of why future profits or discount rates might have changed. Our inability to identify the fundamental shocks that accounted for these significant market moves is difficult to reconcile with the view that such shocks account for most of the variation in stock returns. [15]

Prices move in trends

See also: Market trends

Technical analysts believe that prices trend. Technicians say that markets trend up, down, or sideways (flat). This basic definition of price trends is the one put forward by Dow Theory.[11] In investing, financial markets are commonly believed to have market trends[1] that can be classified as primary trends, secondary trends (short-term), and secular trends (long-term). ...

AOL TimeWarner price action.

An example of a security that had an apparent trend is AOL from November 2001 through August 2002. A technical analyst or trend follower recognizing this trend would look for opportunities to sell this security. AOL consistently moves downward in price. Each time the stock rose, sellers would enter the market and sell the stock; hence the "zig-zag" movement in the price. The series of "lower highs" and "lower lows" is a tell tale sign of a stock in a down trend.[16] In other words, each time the stock edged lower, it fell below its previous relative low price. Each time the stock moved higher, it could not reach the level of its previous relative high price. Download high resolution version (834x490, 11 KB)This is a printout from a software package I purchased and have a license to use. ... Download high resolution version (834x490, 11 KB)This is a printout from a software package I purchased and have a license to use. ...


Note that the sequence of lower lows and lower highs did not begin until August. Then AOL makes a low price that doesn't pierce the relative low set earlier in the month. Later in the same month, the stock makes a relative high equal to the most recent relative high. In this a technician sees strong indications that the down trend is at least pausing and possibly ending, and would likely stop actively selling the stock at that point.


History tends to repeat itself

Technical analysts believe that investors collectively repeat the behavior of the investors that preceded them. "Everyone wants in on the next Microsoft," "If this stock ever gets to $50 again, I will buy it," "This company's technology will revolutionize its industry, therefore this stock will skyrocket" -- these are all examples of investor sentiment repeating itself. To a technician, the emotions in the market may be irrational, but they exist. Because investor behavior does repeat itself so often, technicians believe that recognizable (and predictable) price patterns will develop on a chart.[11]


Technical analysis is not limited to charting, yet is always concerned with price trends. For example, many technicians monitor surveys of investor sentiment. These surveys gauge the attitude of market participants, specifically whether they are bearish or bullish. Technicians use these surveys to help determine whether a trend will continue or if a reversal could develop; they are most likely to anticipate a change when the surveys report extreme investor sentiment. Surveys that show overwhelming bullishness, for example, are evidence that an uptrend may reverse -- the premise being that if most investors are bullish they have already bought the market (anticipating higher prices). And because most investors are bullish and invested, one assumes that few buyers remain. This leaves more potential sellers than buyers, despite the bullish sentiment. This suggests that prices will trend down, and is an example of contrarian trading. A Bear Market is a phase in the life of a stock market or other financial market in which the value of most listed shares of stock fall consistently, or values in a financial market trend downward, as reflected by a downward movement of one or more key stock indexes... Bullish is a term used in financial markets to signify optimism and confidence that security prices will trend higher. ... In finance, a contrarian takes the view that widespread pessimism tends to lead to market rallies and that widespread optimism tends to lead to market slumps. ...


Criticism

The Wall Street Journal Europe states "Whether technical analysis is really useful ... is a matter of some dispute on Wall Street. Some investors believe that it is impossible to forecast the market's ups and downs. Academic studies have shown that when most people, professionals and amateurs alike, try to move money in and out of stocks to beat market fluctuations, they tend to wind up with losses."[17] The same article shows how several technical analysts can simultaneously make contradictory predictions. The Wall Street Journal is an influential international daily newspaper published in New York City, New York with an average daily circulation of 1,800,607 (2002). ...


Lack of evidence

Critics of technical analysis include well known fundamental analysts. For example, Peter Lynch once commented, "Charts are great for predicting the past." Warren Buffett has said, "I realized technical analysis didn't work when I turned the charts upside down and didn't get a different answer" and "If past history was all there was to the game, the richest people would be librarians."[1] Peter Lynch (born January 19, 1944) is a successful Wall Street stock investor whose record ranks him as one of the best stock-pickers in the world. ... Warren Edward Buffett (b. ...


Some academic studies say technical analysis has little predictive power, but other studies say it may produce excess returns. For example, measurable forms of technical analysis, such as non-linear prediction using neural networks, have been shown to occasionally produce statistically significant prediction results.[18] A Federal Reserve working paper[7] regarding support and resistance levels in short-term foreign exchange rates "offers strong evidence that the levels help to predict intraday trend interruptions," although the "predictive power" of those levels was "found to vary across the exchange rates and firms examined." The New York Times reported on Einsteins confirmed prediction. ... An artificial neural network (ANN), often just called a neural network (NN), is a mathematical model or computational model based on biological neural networks. ... In statistics, a result is significant if it is unlikely to have occurred by chance, given that a presumed null hypothesis is true. ... The Federal Reserve System is headquartered in the Eccles Building on Constitution Avenue in Washington, DC. The Federal Reserve System (also the Federal Reserve; informally The Fed) is the central banking system of the United States. ... Support and resistance is a concept in technical analysis that the price of a security will tend to stop and reverse at certain predetermined price levels. ...


Cheol-Ho Park and Scott H. Irwin reviewed 95 modern studies on the profitability of technical analysis and said 56 of them find positive results, 20 obtain negative results, and 19 indicate mixed results: "Despite the positive evidence...most empirical studies are subject to various problems in their testing procedures, e.g., data snooping, ex post selection of trading rules or search technologies, and difficulties in estimation of risk and transaction costs. Future research must address these deficiencies in testing in order to provide conclusive evidence on the profitability of technical trading strategies."[19] Profitability is a technical analysis term used to compare performances of different trading systems or different investments within one system. ...


However, a comprehensive study of the question by Amsterdam economist Gerwin Griffioen concludes that: "for the U.S., Japanese and most Western European stock market indices the recursive out-of-sample forecasting procedure does not show to be profitable, after implementing little transaction costs. Moreover, for sufficiently high transaction costs it is found, by estimating CAPMs, that technical trading shows no statistically significant risk-corrected out-of-sample forecasting power for almost all of the stock market indices."[5] An estimation of the CAPM and the Security Market Line (purple) for the Dow Jones Industrial Average over the last 3 years for monthly data. ...


Efficient market hypothesis

The efficient market hypothesis (EMH) contradicts the basic tenets of technical analysis, by stating that past prices cannot be used to profitably predict future prices. Thus it holds that technical analysis cannot be effective. Economist Eugene Fama published the seminal paper on the EMH in the Journal of Finance in 1970, and said "In short, the evidence in support of the efficient markets model is extensive, and (somewhat uniquely in economics) contradictory evidence is sparse." [20] EMH advocates say that if prices quickly reflect all relevant information, no method (including technical analysis) can "beat the market." Developments which influence prices occur randomly and are unknowable in advance. In finance, the efficient market hypothesis (EMH) asserts that financial markets are informationally efficient, or that prices on traded assets, e. ... Eugene F. Fama. ... Random redirects here. ...


Technicians say that EMH ignores the way markets work, in that many investors base their expectations on past earnings, track record, etc. Because future stock prices can be strongly influenced by investor expectations, technicians claim it only follows that past prices influence future prices.[21] They also point to research in the field of behavioral finance, specifically that people are not the rational participants EMH makes them out to be. Technicians have long said that irrational human behavior influences stock prices, and that this behavior leads to predictable outcomes.[22] Author David Aronson says that the theory of behavioral finance blends with the practice of technical analysis: Economics Nobel Laureate Daniel Kahneman, was an important figure in the development of behavioral finance and economics and continues to write extensively in the field. ...

By considering the impact of emotions, cognitive errors, irrational preferences, and the dynamics of group behavior, behavioral finance offers succinct explanations of excess market volatility as well as the excess returns earned by stale information strategies…. cognitive errors may also explain the existence of market inefficiencies that spawn the systematic price movements that allow objective TA [technical analysis] methods to work.[21]

EMH advocates reply that while individual market participants do not always act rationally (or have complete information), their aggregate decisions balance each other, resulting in a rational outcome (optimists who buy stock and bid the price higher are countered by pessimists who sell their stock, which keeps the price in equilibrium).[23] Likewise, complete information is reflected in the price because all market participants bring their own individual, but incomplete, knowledge together in the market.[23]


Random walk hypothesis

The random walk hypothesis may be derived from the weak-form efficient markets hypothesis, which is based on the assumption that market participants take full account of any information contained in past price movements (but not necessarily other public information). In his book A Random Walk Down Wall Street, Princeton economist Burton Malkiel said that technical forecasting tools such as pattern analysis must ultimately be self-defeating: "The problem is that once such a regularity is known to market participants, people will act in such a way that prevents it from happening in the future." [24] The random walk hypothesis is a financial theory, close to the efficient market hypothesis, stating that market prices evolve according to a random walk and thus cannot be predicted. ... Burton Gordon Malkiel (born August 28, 1932) is an American economist and writer, most famous for his classic finance book A Random Walk Down Wall Street (now in its 8th edition, 2003). ...


Technicians say the EMH and Random Walk theories both ignore the realities of markets, in that participants are not completely rational (they can be greedy, overly risky, etc.) and that current price moves are not independent of previous moves (technicians point to charts similar to AOL above.)[16][25] Critics reply that one can find virtually any chart pattern after the fact, but that this does not prove that such patterns are predictable. Technicians maintain that both theories would also invalidate numerous other trading strategies such as index arbitrage, statistical arbitrage and many other trading systems.[21] Index arbitrage is a subset of statistical arbitrage focusing on index components. ... Statistical arbitrage, or StatArb, as opposed to (deterministic) arbitrage, is related to the statistical mispricing of one or more assets based on the expected value of these assets. ...


Industry

Globally, the industry is represented by The International Federation of Technical Analysts (IFTA). In the United States the industry is represented by two national organizations: the Market Technicians Association (MTA), and the American Association of Professional Technical Analysts (AAPTA). In Canada the industry is represented by the Canadian Society of Technical Analysts. The Market Technicians Association (MTA) is a non-profit, professional organization of technical analysts in the United States. ...


Use of technical analysis

Many traders say that trading in the direction of the trend is the most effective means to be profitable in financial or commodities markets. John W. Henry, Larry Hite, Ed Seykota, Richard Dennis, William Eckhardt, Victor Sperandeo, Michael Marcus and Paul Tudor Jones (some of the so-called Market Wizards in the popular book of the same name by Jack D. Schwager) have each amassed massive fortunes via the use of technical analysis and its concepts. George Lane, a technical analyst, coined one of the most popular phrases on Wall Street, "The trend is your friend!" In finance, financial markets facilitate: The raising of capital (in the capital markets); The transfer of risk (in the derivatives markets); and International trade (in the currency markets). ... This article is in need of attention. ... John W Henry. ... Larry Hite Lawrence D. Hite is a commodities trader, profiled in the book Market Wizards by Jack D. Schwager and along with Ed Seykota is one of the forefathers of system trading. ... Edward A. Seykota (born August 7, 1946) is a commodities trader, best known for having been profiled in the books Market Wizards by Jack D. Schwager and Trend Following by Michael Covel. ... Richard J. Dennis, a former commodities speculator known as the Prince of the Pit,[1] was born in Chicago, in January, 1949. ... William Eckhardt is a commodities and futures trader and fund manager profiled in the book The New Market Wizards by Jack D. Schwager. ... Victor Sperandeo, known as Trader Vic, is a professional wall street stock trader, speculator and investment advisor. ... Michael Marcus at trading office. ... Paul Tudor Jones Paul Tudor Jones is one of the most famous and accomplished commodity traders in the 21st Century. ... A book written by Jack D. Schwager and published in 1988 where he interviews a group of traders with good track records of returns on the market or that have a insights on how to improve as a trader. ... Author of Market Wizards and The New Market Wizards ... George Lane,( 1939 - July 7, 2004) was a name well known in the technical analysis community The stochastic oscillator, which he made popular but not invented, is one of the most popular indicators in use today. ...


Many non-arbitrage algorithmic trading systems rely on the idea of trend-following, as do many hedge funds. A relatively recent trend, both in research and industrial practice, has been the development of increasingly sophisticated automated trading strategies. These often rely on underlying technical analysis principles (see algorithmic trading article for an overview). In electronic financial markets, algorithmic trading, also known as algo, automated, black-box, or robo trading, is the use of computer programs for entering trading orders with the computer algorithm deciding on certain aspects of the order such as the timing, price, or even the final quantity of the order. ... The term hedge fund dates back to the first such fund founded by Alfred Winslow Jones in 1949. ... In electronic financial markets, algorithmic trading, also known as algo, automated, black-box, or robo trading, is the use of computer programs for entering trading orders with the computer algorithm deciding on certain aspects of the order such as the timing, price, or even the final quantity of the order. ...


Systematic trading and technical analysis

Neural networks

Since the early 90's when the first practically usable types emerged, artificial neural networks (ANNs) have rapidly grown in popularity. They are artificial intelligence adaptive software systems that have been inspired by how biological neural networks work. Their use comes in because they can learn to detect complex patterns in data. In mathematical terms, they are universal non-linear function approximators[26] [27] meaning that given the right data and configured correctly, they can capture and model any input-output relationships. This not only removes the need for human interpretation of charts or the series of rules for generating entry/exit signals but also provides a bridge to fundamental analysis as the variables used in fundamental analysis can be used as input. An artificial neural network (ANN), often just called a neural network (NN), is a mathematical model or computational model based on biological neural networks. ... AI redirects here. ... In mathematics, a nonlinear system is one whose behavior cant be expressed as a sum of the behaviors of its parts (or of their multiples. ... The need for function approximations arises in many branches of applied mathematics, and computer science in particular. ... Fundamental analysis of a business involves analyzing its income statement, financial statements and health, its management and competitive advantages, and its competitors and markets. ...


In addition, as ANNs are essentially non-linear statistical models, their accuracy and prediction capabilities can be both mathematically and empirically tested. In various studies neural networks used for generating trading signals have significantly outperformed buy-hold strategies as well as traditional linear technical analysis methods.[28] [29] [30]


While the advanced mathematical nature of such adaptive systems have kept neural networks for financial analysis mostly within academic research circles, in recent years more user friendly neural network software has made the technology more accessible to traders. Neural network software is used to simulate, research, develop and apply artificial neural networks, biological neural networks and in some cases a wider array of adaptive systems. ...


Rule-based trading

Rule-based trading is an approach to make one's trading plans by strict and clear-cut rules. Unlike some other technical methods or most fundamental analysis, it defines a set of rules that determines all trades, leaving minimal discretion.


For instance, a trader might make a set of rules stating that he will take a long position whenever the price of a particular instrument closes above its 50-day moving average, and shorting it whenever it drops below. In finance, a trader is someone who buys and sells financial instruments such as stocks, bonds and derivatives. ... The term moving average is used in different contexts. ...


Combining Technical Analysis with other Market Forecast Methods

John Murphy in his book "Technical Analysis of the Financial Markets", says that the principal sources of information available to technicians are price, volume and open interest. Other data, such as indicators and sentiment analysis are considered secondary.


However, many technical analysts reach outside pure technical analysis, combining other market forecast methods with their technical work. One such approach, known as Fusion Analysis [[2]] overlays fundamental with technical analysis, in an attempt to improve portfolio manager performance. Another advocate for this approach is John Bollinger, who coined the term Rational Analysis as the intersection of technical analysis and fundamental analysis[[3]].


Technical analysis is also often combined with quantitative analysis and economics.For example, neural networks may be used to help identify intermarket relationships [[4]]. A few market forecasters combine financial astrology with technical analysis. Chris Carolan's article "Autumn Panics and Calendar Phenomenon," which won the Market Technicians Association Dow Award for best technical analysis paper in 1998, demonstrates how technical analysis and lunar cycles can be combined [[5]]. Face-to-face trading interactions on the New York Stock Exchange trading floor. ... Financial astrology (also known as business astrology, economic astrology, and/or astro-economics) is the practice of relating/correlating the movements of celestial bodies to events in financial markets. ...


Investor and newsletter polls, and magazine cover sentiment indicators, are also used by technical and market analysts. [[6]]


Charting terms and indicators

Widely-known technical analysis concepts include:

Accumulation/Distribution index is a cumulative total volume technical analysis indicator created by Marc Chaikin, which adds or subtracts each days volume in proportion to where the close is between the days high and low. ... Average true range is a technical analysis indicator developed by J. Welles Wilder, based on trading ranges over a given N-day period. ... An example of Bollinger bands with a 10 day period and width of two standard deviations Bollinger Bands are a technical analysis tool invented by John Bollinger in the 1980s. ... A breakout is when prices pass through, and stay through an area of support or resistance. ... The support level is the lowest price a security trades at, over a period of time. ... The resistance level is the highest price a security trades at over a period of time. ... The Commodity Channel Index (CCI) is an oscillator originally developed by Donald Lambert. ... It has been suggested that some of the information in this articles Criticism or Controversy section(s) be merged into other sections to achieve a more neutral presentation. ... Not to be confused with Golden mean (philosophy), the felicitous middle between two extremes, Golden numbers, an indicator of years in astronomy and calendar studies, or the Golden Rule. ... The Hikkake Pattern (or Hikkake), is a technical analysis pattern used for determining market turning-points and continuations. ... MACD, which stands for Moving Average Convergence / Divergence, is a technical analysis indicator created by Gerald Appel in the 1960s. ... The term moving average is used in different contexts. ... Momentum and rate of change (ROC) are simple technical analysis indicators showing the difference between todays closing price and the close N days ago. ... In securities analysis using technical analysis Money Flow is an indicator that calculates an indexed value based on price and volume for the number of bars specified in the input Length. ... The term moving average is used in different contexts. ... On-balance volume (OBV) is a technical analysis indicator intended to relate price and volume in the stock market. ... Price Activity (PAC) charts are a type of stock chart used in the Technical Analysis of stocks. ... Parabolic SAR fo Ebay during 2002. ... A stop loss order is an order given to a broker to to sell a security when it reaches a certain price. ... For people whose family name is Price see Price (disambiguation). ... A parabola A parabola (from the Greek: παραβολή) is a conic section generated by the intersection of a cone, and a plane tangent to the cone or parallel to some plane tangent to the cone. ... Look up trend, trendy in Wiktionary, the free dictionary. ... Categories: Possible copyright violations ... A point and figure chart is used for technical analysis of securities. ... Profitability is a technical analysis term used to compare performances of different trading systems or different investments within one system. ... The Relative Strength Index (RSI) is a financial technical analysis oscillator showing price strength by comparing upward and downward close-to-close movements. ... The resistance level is the highest price a security trades at over a period of time. ... The Rahul Mohindar Oscillator (RMO) is a type of technical analysis developed by Rahul Mohindar of Viratech India. ... The stochastic oscillator is a momentum indicator used in technical analysis, introduced by George Lane in the 1950s, to compare the closing price of a commodity to its price range over a given time span. ... The support level is the lowest price a security trades at, over a period of time. ... Trend lines are a simple and widely used technical analysis construction drawn on the price charts of traded securities. ... Trix (or TRIX) is a technical analysis oscillator developed in the 1980s by Jack Hutson, editor of Technical Analysis of Stocks and Commodities magazine. ... The term moving average is used in different contexts. ...

Books

  • Ichimoku Charts, Nicole Elliott, Harriman House, 2007, ISBN 9781897597842
  • Getting Started in Technical Analysis, Jack D. Schwager, Wiley, 1999, ISBN 0-471-29542-6
  • New Concepts in Technical Trading Systems, J. Welles Wilder, Trend Research, 1978, ISBN 0-89459-027-8
  • Reminiscences of a Stock Operator, Edwin Lefèvre, John Wiley & Sons Inc, 1994, ISBN 0-471-05970-6
  • Street Smarts, Connors/Raschke, 1995, ISBN 0-9650461-0-9
  • Technical Analysis: The Complete Resource for Financial Market Technicians, Kirkpatrick/Dahlquist, 2007, ISBN 0-1315311-3-1
  • Technical Analysis of Futures Markets, John J. Murphy, New York Institute of Finance, 1986, ISBN 0-13-898008-X
  • Technical Analysis of Stock Trends, 8th Edition (Hardcover), Robert D. Edwards, John Magee, W. H. C. Bassetti (Editor), American Management Association, 2001, ISBN 0-8144-0680-7
  • Technical Analysis of the Financial Markets, John J. Murphy, New York Institute of Finance, 1999, ISBN 0-7352-0066-1
  • The Free E-Book of Technical Analysis, Wallstreetcourier, [7]
  • The Profit Magic of Stock Transaction Timing, J.M. Hurst, Prentice-Hall, 1972, ISBN 0-13-726018-0

Author of Market Wizards and The New Market Wizards ... Reminiscences of a Stock Operator is a 1923 book written by Edwin Lefèvre which tells the life story of Jesse Livermore; the Wall Street Journal describes the book as a classic. // First published in 1923, Reminiscences is a slightly fictionalized account of the life of the trader Jesse Livermore. ...

Notes

  1. ^ John J. Murphy, Technical Analysis of the Futures Markets (New York Institute of Finance, 1986), page 1.
  2. ^ Taylor, Mark P., and Helen Allen (1992). "The Use of Technical Analysis in the Foreign Exchange Market," Journal of International Money and Finance, 11(3), 304–314.
  3. ^ Cross, Sam Y. (1998). All About the Foreign Exchange Market in the United States, Federal Reserve Bank of New York chapter 11, pp. 113-115.
  4. ^ Fama, Eugene (May 1970). "Efficient Capital Markets: A Review of Theory and Empirical Work," The Journal of Finance, v. 25 (2), pp. 383-417.,
  5. ^ a b Griffioen, Technical Analysis in Financial Markets
  6. ^ Brock, William, Josef Lakonishok and Blake Lebaron (1992). "Simple Technical Trading Rules and the Stochastic Properties of Stock Returns," The Journal of Finance, 47(5), pp. 1731–1764.
  7. ^ a b Osler, Karen (July 2000). "Support for Resistance: Technical Analysis and Intraday Exchange Rates," FRBNY Economic Policy Review (abstract and paper here).
  8. ^ Neely, Christopher J., and Paul A. Weller (2001). "Technical analysis and Central Bank Intervention," Journal of International Money and Finance, 20 (7), 949–70 (abstract and paper here).
  9. ^ Lo, Andrew W., Harry Mamaysky and Jiang Wang (2000). "Foundations of Technical Analysis: Computational Algorithms, Statistical Inference, and Empirical Implementation," Journal of Finance, v. 55 (abstract and paper here), pp. 1705-1765.
  10. ^ Burton Malkiel, A Random Walk Down Wall Street pp. 139, 165
  11. ^ a b c John J. Murphy, Technical Analysis of the Financial Markets (New York Institute of Finance, 1999), pages 1-5,24-31.
  12. ^ Nison, Steve (1991). Japanese Candlestick Charting Techniques, 15 -18. 
  13. ^ Nison, Steve (1994). Beyond Candlesticks: New Japanese Charting Techniques Revealed, John Wiley and Sons, p. 14. ISBN 047100720X
  14. ^ Hill, Arthur. Dow Theory. Retrieved on 2006-04-23.
  15. ^ David M. Cutler, James M. Poterba, Lawrence H. Summers, "What Moves Stock Prices?", NBER Working Paper #2538 (March 1988), pp 13-14.
  16. ^ a b Kahn, Michael N. (2006). Technical Analysis Plain and Simple: Charting the Markets in Your Language, Financial Times Press, Upper Saddle River, New Jersey, p. 80. ISBN 0131345974.
  17. ^ Browning, E.S.. "Reading market tea leaves", The Wall Street Journal Europe, Dow Jones, July 31, 2007, pp. 17-18. 
  18. ^ Skabar, Cloete, Networks, Financial Trading and the Efficient Markets Hypothesis
  19. ^ Cheol-Ho Park and Scott H. Irwin, What Do We Know about the Profitability of Technical Analysis? (March 2006).
  20. ^ Eugene Fama, "Efficient Capital Markets: A Review of Theory and Empirical Work," The Journal of Finance, volume 25, issue 2 (May 1970), pp. 383-417.
  21. ^ a b c Aronson, David R. (2006). Evidence-Based Technical Analysis, Hoboken, New Jersey: John Wiley and Sons, pages 357, 355-356, 342. ISBN 978-0-470-00874-4.
  22. ^ Prechter, Robert R., Jr., and Wayne D. Parker (2007). "The Financial/Economic Dichotomy in Social Behavioral Dynamics: The Socionomic Perspective," Journal of Behavioral Finance, vol. 8 no. 2 (abstract here), pp. 84-108.
  23. ^ a b Clarke, J., T. Jandik, and Gershon Mandelker (2001). “The efficient markets hypothesis,” Expert Financial Planning: Advice from Industry Leaders, ed. R. Arffa, 126-141. New York: Wiley & Sons.
  24. ^ Burton Malkiel, A Random Walk Down Wall Street, W. W. Norton & Company (April 2003) p. 168.
  25. ^ Poser, Steven W. (2003). Applying Elliott Wave Theory Profitably, John Wiley and Sons, p. 71. ISBN 0471420077.
  26. ^ K. Funahashi, On the approximate realization of continuous mappings by neural networks, Neural Networks vol 2, 1989
  27. ^ K. Hornik, Multilayer feed-forward networks are universal approximators, Neural Networks, vol 2, 1989
  28. ^ R. Lawrence. Using Neural Networks to Forecast Stock Market Prices
  29. ^ B.Egeli et al. Stock Market Prediction Using Artificial Neural Networks
  30. ^ M. Zekić. Neural Network Applications in Stock Market Predictions - A Methodology Analysis

The Federal Reserve Bank of New York is the most important of the twelve Federal Reserve Banks of the United States. ... Burton Gordon Malkiel (born August 28, 1932) is an American economist and writer, most famous for his classic finance book A Random Walk Down Wall Street (now in its 8th edition, 2003). ... To meet Wikipedias quality standards, this article or section may require cleanup. ... Year 2006 (MMVI) was a common year starting on Sunday of the Gregorian calendar. ... is the 113th day of the year (114th in leap years) in the Gregorian calendar. ...

See also

In electronic financial markets, algorithmic trading, also known as algo, automated, black-box, or robo trading, is the use of computer programs for entering trading orders with the computer algorithm deciding on certain aspects of the order such as the timing, price, or even the final quantity of the order. ... In options trading a box spread is a combination of positions that has a certain (i. ... // [edit] Introduction [edit] Definition If we were to take snapshots of an economy at different points in time, no two photos would look alike. ... A forex (foreign exchange market) simulator is a software program that enables foreign currency exchange traders and students to expedite the learning process. ... // Definition In Elliott wave theory (or the Elliott Wave Principle), the Grand Supercycle is the largest degree of the Elliott Wave Fractal that was proposed by Ralph Nelson Elliott. ... Market analysis plays a major part in a firms planning activities. ... Market timing is the strategy of making buy or sell decisions of financial assets (often stocks) by attempting to predict future market price movements. ... Profitability is a technical analysis term used to compare performances of different trading systems or different investments within one system. ... The following are descriptions of the most common features of technical analysis applications. ... In finance, a trader is someone who buys and sells financial instruments such as stocks, bonds and derivatives. ...

External links

Find more information on Technical analysis by searching Wikipedia's sister projects
Dictionary definitions from Wiktionary
Textbooks from Wikibooks
Quotations from Wikiquote
Source texts from Wikisource
Images and media from Commons
News stories from Wikinews
Learning resources from Wikiversity
  • Society of Technical Analysts of New Zealand
  • International Federation of Technical Analysts
  • American Association of Professional Technical Analysts
  • Market Technicians Association

  Results from FactBites:
 
MetaStock.com (182 words)
Our powerful analysis tools lead you to more informed decisions about which markets to trade and when to buy and sell.
Whether you trade stocks, bonds, futures, commodities, FOREX, or indices, we have the tools you need.
MetaStock is the best selling investment analysis software in the world - it's the 14-time winner of Technical Analysis of Stocks and Commodities Magazine™ Reader's Choice Award for best analysis software.
  More results at FactBites »

 
 

COMMENTARY     


Share your thoughts, questions and commentary here
Your name
Your comments

Want to know more?
Search encyclopedia, statistics and forums:

 


Press Releases |  Feeds | Contact
The Wikipedia article included on this page is licensed under the GFDL.
Images may be subject to relevant owners' copyright.
All other elements are (c) copyright NationMaster.com 2003-5. All Rights Reserved.
Usage implies agreement with terms, 1022, m