Stock Technical Analysis Course – Charting is Not All it is Cracked Up To Be
It must be pointed out that as there are more and more market participants any work to chart and predict each action , the accumulative effect of those similar actions self-creates price fluctuations which might destroy much of the validity of all chart techniques .
As a chartist, you have lots of company . There are many others that are charting every move like you are doing. When a big move is predicted, there will probably be many orders out there similar to yours. Specifically, having many chartists place their stop loss orders at points that are identical , can create false formations to occur. Charting is a science that proves to be at least somewhat inexact, even for people who have a stock technical analysis course under their belts .
It is a matter of choice what scale the chart is on and whether the mid-price or closing price is used . To plot price movements , either can be distorted . Usually the latter is used most often , but since it happens at the end of the day profit taking is often associated with it and more. Moreover , events that are dynamic or unforeseeable can cause mayhem with the charts .
Charting is to some extent a lazy approach . The neat clinical look of a sheet of paper appeals to the many weaker brethren . Who have no penchant or time to try to dig deeper. Most people like to think it is more productive to look at all the variations . As technical analysis becomes more poplar and many begin taking a stock technical analysis course, it will commence to defeat its own purpose , especially in a market that is “thin” .
It is important to realize that is many traders are trading a commodity using usual chart interpretations , it will influence the price of that commodity in the track the prices are expected to move by chartists . Chart followers are able to prove right their own theories. While a pure chartist does not wish to know a thing about fundamentals , combining futures trading taking from both strategies is what a wise trader will try. There is no 100% reliable chart formation . One must seek confirmation from other indicators , such as changes in production from year to year, variation in business cycles , and deviations in sums that are quantifiable, such as commodity prices, brought down to a single summary figure to show all the activities.
Often the commodity goes completely contrary to fundamental considerations because of technical factors and more. To succeed chartists must be ready to do a lot of work and study and to become experienced . Charting is an art because of its skill and the finesse and experience of the technician . These are all definitely the essential ingredients of profitable trading . The technician must constantly check and re-check .
Another difficulty from charting stems from the belief that while the speculator knows all the commodity situation facts these facts are also known by large trading houses and other professionals .
In reality, however, unexpected events can occur and affect all traders . prices may not have totally discounted these happenings, in which case the chartist may be caught off-guard and not much can be done to keep your position protected except to recognize quickly these sudden changes and to take action fast . ( Such as all the oranges being lost to a hurricane ).
Technicians are known to make a huge profit in one week and then lose big time the next week . It is a fact of life that prices will not fluctuate according to what their past performance dictates , but you can get an idea on a daily basis if you use P&L charting.
Most systems are indictable when it comes to advisability because of the absence of a track record . Each approach has to be looked at as unsuccessful until it has proved otherwise . To be upfront about it, there isn’t much available evidence that is objective to support the commonly accepted rules of chart analysis . Quite a few chartists try to foresee trends. This is a fallacy . People can’t assume upon a trend that is non existent. If you want to utilize a trend with the method following, one must wait until the trend has demonstrated itself . Even then, the motto a chartist needs to have is that a trend continues until it stops . Yet again, he attempts figuring out the direction of a trend reversal as it happens. It is not possible. One can only be aware of the new trend evolving as it occurs . Most technical systems cannot anticipate a trend or trend reversal .
If a move occurs that is unexpected , most technicians have to begin again . After going through a string of bad losses , technical studies are often abandoned by traders because they just don’t work . Since it occurs fairly often , it is further proof that short cuts don’t exist to trading success and no substitutes for experience, knowledge and hard work .
The fact that prices fluctuate is all we know for sure , but not how much .
Protection is only available in those congestion areas because this area helps to define the loss projections. In congestions, prices fluctuate . Any technical approach that attempts to analyze congestion areas , and therein a trading method comes into being, will provide the trader (and his broker through lots of commissions) glorious profits , since commodity prices happen to be in congestion , one form or another 85 % of the time .
The problem that both professionals and novices deal with is when they need to get in or out of a market. On this basis , a stock technical analysis course should teach you that technical analysis must to some degree encompass price fluctuations in the short term ( Yes, another good plug for P&L charting ).