Sri Lanka Equity Forum
Dear Reader,

Registration with the Sri Lanka Equity Forum would enable you to enjoy an array of other services such as Member Rankings, User Groups, Own Posts & Profile, Exclusive Research, Live Chat Box etc..

All information contained in this forum is subject to Disclaimer Notice published.


Thank You
Sri Lanka Equity Forum
Sri Lanka Equity Forum

Discussion Forum for Stock Market Investors in Sri Lanka

සිංහල පරිවර්තනය
Submit Post
Submit Post

Latest topics

» Ravi him helf introduce, he is Solar Parakramabahu
by Miss-Sangeetha Today at 4:58 pm

» EAST Steady at 18
by m2_yapa Today at 3:59 pm

» God bless ETF fund sri lanka
by Uaecoindubai Today at 1:03 pm

» DONT SELL JINS DEAL ALREADY FINALIZED ABOVE 32
by Uaecoindubai Today at 12:12 pm

» Market will test 4700
by Maharaja Today at 12:06 pm

» Please DON'T SELL IN PANIC, BUY, ONLY A SMALL INCIDENT, IT'S COMPLETELY OVER!!!!!
by Uaecoindubai Today at 12:05 pm

» BFN බොරු සෙලින් දාලා කොහොම හරි 11 වගේ ගානට 500000 එකතු කරගන්න කියලා අර 14 ට ලක්ශයක් සෙලින් දැම්මේ මේ ටේලර් මහත්තයාම තමයි
by Uaecoindubai Today at 11:54 am

» Daily Stock Market Update
by sanjulanka Today at 6:41 am

» BFN slowly slowly unloading
by sanjulanka Today at 6:29 am

» CIND , 10% guaranteed return
by Yahapalanaya Today at 1:50 am

» DIST 91% Profit down ---
by Uaecoindubai Yesterday at 4:09 pm

» Why AAIC Should trade above RS.50/-
by Uaecoindubai Yesterday at 12:24 pm

» 8 Finance companaies to be closed very soon
by sanjulanka Yesterday at 6:42 am

» Asanga senavirathana- king of right issue
by Uaecoindubai Wed Apr 24, 2019 1:42 pm

» Losses to continue at Aitken Spence Hotels
by Uaecoindubai Wed Apr 24, 2019 1:37 pm

» Hayleys to report heavy losses
by Uaecoindubai Wed Apr 24, 2019 11:35 am

» Singer to report heavy losses
by God Father Wed Apr 24, 2019 10:34 am

» Sri Lanka to reopen hotels without guests
by Sstar Wed Apr 24, 2019 10:27 am

» GOLDEN ERA
by soileconomy Wed Apr 24, 2019 7:18 am

» HOTEL INDUSTRY
by soileconomy Wed Apr 24, 2019 5:44 am

» Buy When There's Blood in the Streets
by hammurabi Tue Apr 23, 2019 8:48 pm

» ASPI should down To 4950
by Uaecoindubai Tue Apr 23, 2019 7:01 pm

» SME M&A opportunity
by Ram13 Tue Apr 23, 2019 3:49 pm

» Central bank Issue
by Uaecoindubai Tue Apr 23, 2019 12:41 pm

» Look PAP Amazing company
by dmtmadusanka Mon Apr 22, 2019 4:15 pm

» Commencement of Trading at CSE
by Uaecoindubai Mon Apr 22, 2019 3:58 pm

» Good news from JKH : Will this be the market mover ?
by gjooos Mon Apr 22, 2019 1:06 pm

» whats the purpose of Bomb blasts?
by sanjulanka Mon Apr 22, 2019 9:11 am

» Best Free forex signals provider
by Uaecoindubai Sun Apr 21, 2019 3:24 pm

» Chairmam of Sanasa arrested over suspicion of misappropriation of funds
by hammurabi Sun Apr 21, 2019 9:36 am

» Sri Lanka Kattadiyalage Wegapitiya tries to manipulate Household Gas prices in Gas market, Wegapitiya lead LAUGFS Gas in a secret Deal to Bankrupt Government's Litro Gas by affecting 1.3 Million Households and 5 million people in the country
by Uaecoindubai Sat Apr 20, 2019 2:55 pm

» Economic Health of Sri Lanka
by Uaecoindubai Sat Apr 20, 2019 2:30 pm

» What is going on with TFC.N0000
by Uaecoindubai Sat Apr 20, 2019 2:30 pm

» REEF possible run.
by hammurabi Sat Apr 20, 2019 6:50 am

» EAST INTERESTING DAYS AHEAD 25+
by glad Fri Apr 19, 2019 10:40 am

» Weekly Stock Market Roundup
by Insights Equity Fri Apr 19, 2019 8:35 am

» Would CIC make an upward move in the coming weeks?
by hammurabi Fri Apr 19, 2019 12:39 am

» Sri Lanka Hilton Hotels Must Investigate or Oust Unfit and Improper - Kashmi App Bankrupted Sanjiv Alles who hides about his Career in Kashmi for Colombo Hilton Hotel Director Profile
by AmalHoole Thu Apr 18, 2019 12:47 pm

» Why ALHP is having a huge demand despite consecutive losses?
by wisdom79 Thu Apr 18, 2019 11:03 am

» TIME TO LOOK AEL
by sanjulanka Wed Apr 17, 2019 6:42 pm

» HEXP next run up to 120-130
by nishjaya Wed Apr 17, 2019 12:21 pm

» Cabinet nod for Colombo Stock Exchange to be converted to a company limited by shares
by glad Wed Apr 17, 2019 9:30 am

» Lanka Bell to be acquired by Mobitel - Sources
by soileconomy Wed Apr 17, 2019 7:07 am

» Sri Lanka Watapota (WAPO) Guardian Capital lose Rs. 10 Mn of Funds because of Kashmi App Closed down, Kashmi Co-Founder Bankrupt Sanjiv Alles now landed on Hilton Colombo Director Board owned by Yahapalana Government
by AmalHoole Tue Apr 16, 2019 3:17 pm

» සුභ අලුත් අවුරුද්දක් වේවා.
by sanjulanka Mon Apr 15, 2019 12:38 pm

» I bought PCHH.N and SING.N sometimes back?
by hammurabi Mon Apr 15, 2019 12:14 pm

» Highest temperature hike after 128 years in sri lanka
by nimantha80 Sun Apr 14, 2019 4:47 pm

» DEBTS FREE AAIC MUST MOVE UP,3.36BN FROFIT, MARCH Q 1.00BN
by wisdom79 Sun Apr 14, 2019 8:15 am

You are not connected. Please login or register

Sri Lanka Equity Forum » Stock Market Charts & Graphs » Technical Analysis Guide

Technical Analysis Guide

Go down  Message [Page 1 of 1]

1Technical Analysis Guide Empty Technical Analysis Guide on Sun Jan 30, 2011 10:23 am

Quibit

Quibit
Senior Vice President - Equity Analytics
Senior Vice President - Equity Analytics
What Is Technical Analysis?
Technical Analysis (TA) is the study of charts to predict future prices and create trading systems. Although this guide uses examples of stock charts, the principles work just the same on any type of financial instrument, including forex, futures, market indexes, etc. Now let’s get started. Below is a sample stock chart that a chartist might study:

[You must be registered and logged in to see this image.]

The details of the above chart will be explained shortly, but as you can see, there’s no reason to be intimidated. Technical analysis is almost completely visual. It doesn’t require a degree in finance or economics, nor does it require exceptional skill in mathematics. If you can read a chart, you can be a chartist.

Technical Analysis vs. Fundamental Analysis
Most have heard of fundamental analysis (FA). In fact, it’s the stock market investing strategy that most are taught first. FA looks at things like earnings, cash flow, debt or any other financial aspect of a company, i.e., the “fundamentals” of a company. “Fundamentals” can also refer to economic fundamentals affecting the entire stock market. A person using FA might study financial statements to discover what he thinks a company’s stock should be worth, and then, if the stock is trading below that value, buy it hoping to make a future profit. In this way FA is a strategy concerned with the inner workings of companies.

In contrast, technical analysis isn’t concerned with financial statements, management or anything else underlying a company’s business. Pure chartists only study how stock prices have behaved in the past and how that could affect them in the future. In fact, a chartist using technical analysis might buy and sell a stock knowing nothing about what the underlying company does.

For an example, a person using TA might notice that, in the past year, every time XYZ’s stock goes down to $25 it soon bounces back up to $35. He would then buy XYZ at $25, hoping that it will bounce back up to $35 again. He doesn’t necessarily know or care why XYZ has been bouncing between $25 and $35, but he tries to profit from it nonetheless.

The Better Stock Market Investing Strategy: Technical Analysis or Fundamental Analysis?
The ongoing debate between TA and FA alone could fill up a book. Ever since the concept of TA surfaced, die-hard FA traders have said that TA is worse than snake oil. On the other side, avid chartists swear that FA is a waste of time. Which is the better stock market investing strategy? It depends on whom you ask, but the answer is probably somewhere in the middle. Take the following two successful money managers:

Jim Rogers uses fundamental analysis exclusively and ran The Quantum Fund along with George Soros in the 1970’s. For the 30 years that the fund existed, it averaged over 30% a year-- phenomenal results relative to other funds and the S&P 500 index. When Jack Schwager, author of the Getting Started in Technical Analysis, asked Rogers about technical analysis, Rogers responded, “I’ve never met a rich technician. Excluding, of course, technicians who sell their services and make a lot of money.”

On the other hand there’s Marty Schwartz, a money manager who exclusively uses technical analysis. At the request of Jack Schwager, Marty had his past 10 years of trading records audited. The results were that over the previous 10 years, Marty averaged 25% a month, and during those 10 years only suffered two losing months of 2% and 3%-- results too consistent to be attributed to chance. When asked about why he switched from fundamental analysis to technical analysis, Marty’s answer sounded like a rebuttal to Jim Rogers’ comment: “I always laugh at people who say, ‘I’ve never met a rich technician.’ I love that! It’s such an arrogant, nonsensical response. I used fundamentals for nine years and got rich as a technician.”

As you can see, there’s no consensus on whether TA or FA is the better stock market investing strategy; even the experts are divided. You’ll have to draw your own conclusions, but if you should care to look, there are plenty of books and research papers arguing both sides.

Using Both TA and FA
Even though experts argue about technical analysis vs. fundamental analysis, don’t let that fool you into thinking they’re polar opposites. You can use both in your investing strategy or you can realize they’re different versions of the same thing. Indeed, many chartists treat TA as a short cut to FA. Jack Schwager, long time chartist and author, elaborates:

“Technical analysis and fundamental analysis are more closely related than most would lead you to believe…[most chartists] do not dismiss the relevance of fundamental factors; they simply believe that price data incorporates and reflects these factors, and the best way to understand their impact on market behavior is to analyze charts.”

Others use both when selecting investments, using fundamentals for identifying sound investments, and then using TA to time their buying and selling. William O’Neil, founder of Investors Business Daily, is an advocate of using both TA and FA.

Charles Dow, founder of The Dow Jones Industrial Average, was also a man who used TA and FA. His Dow Theory resulted from a series of articles published in The Wall Street Journal between 1900 and 1902. In fact, the Dow Theory is thought by many to be predecessor to most principles of modern technical analysis.

Regardless of how you use technical analysis, it should not be ignored completely. When it comes to finding good stock market investing strategy, information is power, so you’re not doing yourself any favors by ignoring the charts. While extremists deny the utility of technical analysis, most reasonable people concede it has its place. Many major brokerage houses hire chartists, and the financial media often refer to it. At worst, learning TA will lead to a more thorough understanding of the market; at best, it will prove to be a valuable money-making tool



Last edited by Quibit on Sun Apr 24, 2011 8:58 pm; edited 4 times in total

2Technical Analysis Guide Empty Re: Technical Analysis Guide on Sun Jan 30, 2011 10:36 am

Quibit

Quibit
Senior Vice President - Equity Analytics
Senior Vice President - Equity Analytics
Before Getting Started

Jargon to Know
You may already know the following, but it’s important to make clear a few terms before we get started:
*A bull, or someone who is bullish, is someone who thinks a market or a security will go up.
*A bear, or someone who is bearish, is someone who thinks a market or a security will go down.
*The terms technical analysis and chart reading are synonymous.
*A chartist and a technician are the same thing. They’re both practitioners of technical analysis.
*Going long means to bet that something will go up.
*Going short means to bet that something will go down.

3Technical Analysis Guide Empty Re: Technical Analysis Guide on Sun Jan 30, 2011 6:16 pm

tubal


Vice President - Equity Analytics
Vice President - Equity Analytics
When you post stuff like this it's nice if you post the source as well, otherwise it's not fair on the original author.

4Technical Analysis Guide Empty Re: Technical Analysis Guide on Thu Feb 24, 2011 7:57 pm

rasitha


Stock Analytic
Stock Analytic
Tx machang for this ..... i was looking for some info about Technical Analysis

tx a lot

5Technical Analysis Guide Empty Re: Technical Analysis Guide on Mon Jan 02, 2012 10:39 pm

Kumar

Kumar
Senior Vice President - Equity Analytics
Senior Vice President - Equity Analytics
Very good one for novices like me,
Thanks a lot.

6Technical Analysis Guide Empty Re: Technical Analysis Guide on Tue Jan 03, 2012 12:27 am

kaka


Assistant Vice President - Equity Analytics
Assistant Vice President - Equity Analytics
Good work kumar, thanks

7Technical Analysis Guide Empty Re: Technical Analysis Guide on Mon Jun 04, 2012 2:30 pm

Redbulls

Redbulls
Director - Equity Analytics
Director - Equity Analytics
Good one.
Thanks a lot.

8Technical Analysis Guide Empty Re: Technical Analysis Guide on Thu Dec 01, 2016 11:28 am

jehovah

jehovah
Equity Analytic
Equity Analytic
thanks!! Laughing

Back to top  Message [Page 1 of 1]

Permissions in this forum:
You cannot reply to topics in this forum