Charting and Technical Analysis

It’s not necessary to be an expert chartist to benefit from chart analysis. However, chart analysis will go a long way in keeping the trader on the right side of the market and in helping to pinpoint market entry and exit points, which are so vital to trading success. Trading and Investing with the market should always be your ultimate goal. Whether the participant is a day trader or a long-term investor, buying at the wrong time is most always a recipe for loss. By implementing chart analysis as an investing and trading tool, investing with the market instead of against it can be attained. That is 90% of the battle.

Author’s Note:

Every investing mistake is a result of one thing. Either the wrong investment was purchased, or the investment was purchased at the wrong time. Historically, in good market times most every investment advances with the market. Even purchasing a bad investment during a strong bull market can sometimes be profitable. Yet during market declines, and especially in bear markets, the opposite holds true. During bad market times more than 80% of all stocks and funds decline in value.

Therefore, purchasing any investment at the wrong time is most always the recipe for loss. Prior to every market decline, and particularly leading up to the last two bear markets in 2000 and 2007, unsuspecting and uninformed investors were continually sold investments that would certainly hand them a loss. Unfortunately, this is always a reoccurring tragedy. Since 1900 there has been a bear market on the average of every 3.5 years with an average decline of 29%.

Investing and trading can be profitable for the informed investor, but very costly for the uninformed. One of the inspirations that led to writing this book came from a good friend with whom I had shared some of the techniques and strategies used in technical market analysis.

He later sent me the following message.

“Before I learned technical analysis, I was happy in my ignorance. I was not very profitable… but happy. But after learning the predictive value of charting, I could never feel safe in the market again without charts. It would be like driving cross-country without a road map. Charts really can tell you where to buy or sell and they have saved me from losses more times than I can count.”

Many in this generation have been led to believe that buy-and-hold is the ultimate in market knowledge. But, in today’s markets, you need charting methods that have stood the test of time, and helped the uninformed investors navigate the treacherous trading and investing environment. Throughout this book you will discover the difference between being informed and uninformed. You will become informed and learn to avoid making costly investing and trading mistakes.

Contents:

• The Dow Theory.
• The Three-Trend Market
• The Three Phases of Primary Trends.
• The Laws of Charts.
• Candlesticks Defined.
• Formations.
• More Formations.
• Support, Resistance, and Trends.
• Trend Lines.
• Chart Patterns.
• Reversal Patterns.
• Inverted Head and Shoulders Pattern.
• Double Tops and Bottoms.
• Double Top.
• Saucers and Spikes.
• Continuing Patterns.
• Flags and Pennants.
• Bull Flag.
• Price Gaps.
• The Key Reversal Day.
• Reversals.
• Percentage Retracements.
• The Interpretation of Volume.
• Moving Averages.
• My Personal Favorite.
• Popular Moving Averages.
• Stop Losses.
• Trailing Stop Loss.
• Putting it all Together
• Trading the Declines.
• Know the Difference.

Charting and Technical Analysis By Fred Mcallen pdf