Mastering Technical Analysis is designed with this idea in mind and speaks to the average investor rather than the student, the professional Wall Street trader, or the highly specialized technician. It will simplify and explain rather than confuse; it will demonstrate and pose alternatives rather than assume one outcome and move ahead from there. The book is meant to help you gain insights and understanding.
Technical analysis is nothing like fundamental analysis. Instead of depending on historical financial information, the technician believes that changes in stocks and in the market itself can be judged based on recent trends in stock price changes, the relationship between price and earnings, the volume of activity in a particular stock or industry, and other similar indicators.
While the fundamental investor bases decisions on historical changes in financial strength, the technician depends on more immediate market-related trendsstock price changes reflected in charts, the shape of chart movements, volume and volatility indicators, and index changes, to name a few.
The purpose of this book is to demonstrate the range of technical indicators and to provide you with practical methods for incorporating those indicators into your individual program for analysis. Several useful tools are employed to aid you in this, including:
Graphs and charts. Technical analysis is based on the study of price movement trends (among other factors), which requires extensive study of price charts and volume within stocks and industry groups.
Examples. To clarify points, few techniques work as well as the use of applicable examples. This book attempts to show how theories can be applied in the real world of the stock market, and how outcomes may vary from one person to another, requiring different response strategies.
Definitions. The stock market is daunting for even experienced investors because of the specialized jargon and lingo used by insiders. While the unique language of Wall Street might be convenient for those who work there every day, it also isolates the average individual investor.
Key points. Another handy tool to help you as you go along is the use of key points. These are highlighted throughout the book in sidebars. You can work your way through the book, reading only the key points, and gain an overview of the flow of information, pausing to read further when needed.
Walk-throughs. Step-by-step summaries of methods and techniques help you to grasp the idea of the moment without trouble. In comparison, an overly complex narrative explanation might require far more work to comprehend.
- Cycles in Investing
- Predicting Supply and Demand
- The Dow Theory and How It Works
- The Dow Jones Averages
- Charting Basics
- Trends and Averages in Technical Analysis
- Valuable Indicators You Can Use
- Sentiment Indicators
- Technical Indicators and Risk
- Combining Technical and Fundamental Analysis