Key points to be noted in Technical Analysis

oxusmorouz · #11 13th November 2006, 05:40 PM

Well, I am no authority in technical analysis nor do I have enough experience in trading using technical analysis but I am urged by the love for the art to share my views.
Choosing an indicator, as pointed out well by someone already, depends on a variety of factors and on the individual. Indicators exist in your software/book because they were used profitably by someone, and hence cannot be considered "good" or "bad" as such.
What is important, however, is breaking down of the indicators so as to get a clear picture of their working. For example, a lot of beginners know that a faster moving average above the slower moving average (or moving average below the price) is a bullish sign. Why? Because it makes you wait for a sufficient time (according to your frame) before you exit, instead of exiting prematurely. This part is ignored by most beginners but any analyst would tell you this is what is important.
MACD is another example. It was ,perhaps, introduced to reduce the lag effect of the moving average crossover. Being the difference between 2 moving averages, and the signal line being a moving average of the difference, the signals are quicker than a moving average crossover and yes, one gets more false signals. Again the purpose is to make one wait before hurrying into trade. I could go on further, but I'm sure some of you would have fallen asleep already.
Any good analyst would tell you that a moving average crossover or a macd crossover doesn't mean that the price has to necessarily move up or down.Remember, these indicators are based on price and the price isn't based on these indicators.
Good luck trading.

Oxusmorouz.

munchikana · #12 13th November 2006, 08:57 PM

Original Question: What are the indicators to be considered while analysing a stock?

A very relevant and interesting answer by one learned member is quoted hereblow.

Quote:

Originally Posted by CreditViolet

Price

CV

Some more could be (this is not the end of the list)

1. Good observation

2. Trendlines

3. Above all, commonsense, which is the most uncommon thing now a days.

lohiya · #13 13th November 2006, 10:01 PM

Quote:

Originally Posted by munchikana

Original Question: What are the indicators to be considered while analysing a stock?

A very relevant and interesting answer by one learned member is quoted hereblow.

Arrey bosses koi meri post bhi quote kar deta, though I am a junior

Quote:

Well, I consider volumes also

ash.investor · #14 13th November 2006, 10:46 PM

Hi lohiya,

I truely agree with you and even I check for volumes. Volume means the amount of stock bought and sold on that day. Volume should be analyzed by comparing the recent volumes. An easy way to check this is drawing a 10 day simple moving average in volumes histogram chart. If the volume bars are above its 10 day average and the price is rising, this is a good sign and indicates that price has the momentum to break its previous high. Price Volume Trend Indicator is a very good example of this.
Volume in other words shows that how much people are enthusaistic to buy or sell particular stock

Regards,
a$h.investor

Satyen · #15 13th November 2006, 11:10 PM

hi a$h
plz tell us some thing on openinterest . how can we get cues from it for cash market

Regards
satya

ash.investor · #16 13th November 2006, 11:44 PM

Quote:

Originally Posted by satya_pinku2003

hi a$h
plz tell us some thing on openinterest . how can we get cues from it for cash market

Regards
satya

Hi Satya,

Sorry, even I don't know the concept of open interest. I wouls suggest you to check the Derivatives --> Options section, as there are some threads related to Open Interest.

Regards,
a$h.investor

kurian · #17 14th November 2006, 08:51 AM

haii oxusmorouz

tht was nice
kurian

Quote:

Originally Posted by oxusmorouz

Well, I am no authority in technical analysis nor do I have enough experience in trading using technical analysis but I am urged by the love for the art to share my views.
Choosing an indicator, as pointed out well by someone already, depends on a variety of factors and on the individual. Indicators exist in your software/book because they were used profitably by someone, and hence cannot be considered "good" or "bad" as such.
What is important, however, is breaking down of the indicators so as to get a clear picture of their working. For example, a lot of beginners know that a faster moving average above the slower moving average (or moving average below the price) is a bullish sign. Why? Because it makes you wait for a sufficient time (according to your frame) before you exit, instead of exiting prematurely. This part is ignored by most beginners but any analyst would tell you this is what is important.
MACD is another example. It was ,perhaps, introduced to reduce the lag effect of the moving average crossover. Being the difference between 2 moving averages, and the signal line being a moving average of the difference, the signals are quicker than a moving average crossover and yes, one gets more false signals. Again the purpose is to make one wait before hurrying into trade. I could go on further, but I'm sure some of you would have fallen asleep already.
Any good analyst would tell you that a moving average crossover or a macd crossover doesn't mean that the price has to necessarily move up or down.Remember, these indicators are based on price and the price isn't based on these indicators.
Good luck trading.

Oxusmorouz.

falumittir · #18 14th November 2006, 10:55 AM

gr8. the answer is very straight forward & helped me a lot. thanks.

munchikana · #19 14th November 2006, 04:46 PM

Quote:

Originally Posted by lohiya

Arrey bosses koi meri post bhi quote kar deta, though I am a junior

No more class consciousness here. I regard myself only as a member. As I stated in my post, the list given by me is not the end of it. What really prompted me to quote the post of credit violet is the quick, practical and witty thinking behind the said post. I just thought of patting his back gently as he succeeded in bringing smile on my face.

lohiya · #20 14th November 2006, 05:44 PM

quote bhi, bold bhi, underline bhi. Hats off! thanks.
and thanks to CV too.

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