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hi there, i have decided to take the narcisstic approach, and create a space for people to discuss issues with all aspects of technical analysis in particluar, but also tactics for intra day stock picking and exit/entry points, as well as other tip sharing. I have been trading for 2 years now and have learnt from many early mistakes when i just picked stocks on fundemntals alone, without any reference to the chartist and technical picture. I still do research, phone directors, read investor magazines and listen to the kind tips offered by other posters. however, i am beginning to develop a system and a way of interpreting the technical data which is more often than not, leading to more thought through trading decisions.
this space is a way for me to justify and share my technical understanding, but with the understanding that i am still learning and don,t have a fool proof panacea.
feel free to ask any questions.
this space is a way for me to justify and share my technical understanding, but with the understanding that i am still learning and don,t have a fool proof panacea.
feel free to ask any questions.
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how is it narcissistic? you have 2 years of trading experience and want to share your tips. it's only narcissistic if you think you're right and your opinion is superior to everyone else's (i think?!).
LESSON 1. fibonacci retracement theory.
he was a 17th century italian mathematician who studied "sequences in nature". e.g the relationship between the sizes of the shell sizes and the relationship between them. In the 1960s/70s traders started to apply his sequential understanding in understanding why share prices seem to have certain patterns. Now whether these fibonacci figures have intrinsic value or whther due to thier use and application they have developed a " significance" is not our issue. our issue is that they DO HAVE SIGNIFICANCE. The 4 main retracement percentages are 23.2% , 38.2%, 50% and 61.8%.
USES?.
once a share price has demonstrated a significant " low", and feel it has " bottomed ( as determined by the RSI, MAs and stochastics to be covered in a nother lesson), then i will look at the 3 -6 month chart and identify a significant " high", and try to make this the last " significant high" n relation to the " low". Therefore if the low is 10pence, and the previous high was 40p, the "difference" is 30pence. it is this 30pence figure that we apply the fibonacci retracements to. we are looking for this stock to retrace 23.2%of this 30p drop in price, to give us our first upside target.this gives us 10pence plus our 23.2% of 30p ( approx 7pence) = target of 10=7p = 17p fibonacci target. Once this has been met, you then look at the 38.2% fibonacci target of the 30p drop as our next target. ( the java chart function on www.iii.co.uk does the calcuation for you, all you have to do is " identify" your highs and lows, which can be 1 month or 1 year apart, though i tend to use the 6 month chart as a start point). for exmples of how it can work look at AGU and TEG on www.iii.co.uk as " spurslegend", i have posted these under the heading " techncials"
he was a 17th century italian mathematician who studied "sequences in nature". e.g the relationship between the sizes of the shell sizes and the relationship between them. In the 1960s/70s traders started to apply his sequential understanding in understanding why share prices seem to have certain patterns. Now whether these fibonacci figures have intrinsic value or whther due to thier use and application they have developed a " significance" is not our issue. our issue is that they DO HAVE SIGNIFICANCE. The 4 main retracement percentages are 23.2% , 38.2%, 50% and 61.8%.
USES?.
once a share price has demonstrated a significant " low", and feel it has " bottomed ( as determined by the RSI, MAs and stochastics to be covered in a nother lesson), then i will look at the 3 -6 month chart and identify a significant " high", and try to make this the last " significant high" n relation to the " low". Therefore if the low is 10pence, and the previous high was 40p, the "difference" is 30pence. it is this 30pence figure that we apply the fibonacci retracements to. we are looking for this stock to retrace 23.2%of this 30p drop in price, to give us our first upside target.this gives us 10pence plus our 23.2% of 30p ( approx 7pence) = target of 10=7p = 17p fibonacci target. Once this has been met, you then look at the 38.2% fibonacci target of the 30p drop as our next target. ( the java chart function on www.iii.co.uk does the calcuation for you, all you have to do is " identify" your highs and lows, which can be 1 month or 1 year apart, though i tend to use the 6 month chart as a start point). for exmples of how it can work look at AGU and TEG on www.iii.co.uk as " spurslegend", i have posted these under the heading " techncials"
well it makes a lot of sense..better than the pin on the grand national runners.....good work.
riddler, might i suggest adding some actual charts to better show people what you mean.. Information on how to here http://www.lse.co.uk/general-chat-discussion.asp?TopCode=NA5HT4RS
headforthe hills..i will do, but it is difficult to posts charts on to here from iii, but i am working on it !
LESSON 2 BOLLINGER BANDS
WHAT ARE THEY? basically they are trend channels, and when a share price is above the upper line OR is trading within the 2 bands, then the share can be concluded to be "trading within the direction of the bands". They can be found by going to your chosen share on LSE, and click the "share chart" option for your share. on the right hand side " graph type" scroll down chart choose " bollinger lines", and you will see a lower ( red) and upper( green)line.
USES...( using the graph icon as mentioned above)
for short term choose the 3 MONTH, with 9 DAY MOVING BASE
for medium term choose the 6 MONTH with 18 DAY MOVING BASE
for long term choose the 1 year with 50 DAY MOVING Base
1. if i feel a stock is showing some momentum, or new is on the way, i am looking for the stock to cross the green upper line, after trading below it OR merely trading sideways within the lines. I would initiialy look at the 3 mnth chart. For exmple if you follow my threads on CHL, i identified a few days ago that it was going to cross its upper bollinger line on the 3 month chart, and if you follow the share price it has done this, AND gone up 10%+)
2. once crossed i want CHL to stay ABOVE or TOUCHING the upper green line, if it keeps doing this then it is a good sign that CHL has entered a new short term trading channel.
3. it CAN drop beneath it AS LONG as it DOESN,T fall through the lower bollinger line, as this can be bearish.
4. then spread the net, and check the medium term and long term bollinger channels to gain greater confidence that CHL is breaking " bollinger upper resistance.
these are the basics so PLEASE ASK questions or CHALLENGE my ideas to help me develop my trading.
atb
WHAT ARE THEY? basically they are trend channels, and when a share price is above the upper line OR is trading within the 2 bands, then the share can be concluded to be "trading within the direction of the bands". They can be found by going to your chosen share on LSE, and click the "share chart" option for your share. on the right hand side " graph type" scroll down chart choose " bollinger lines", and you will see a lower ( red) and upper( green)line.
USES...( using the graph icon as mentioned above)
for short term choose the 3 MONTH, with 9 DAY MOVING BASE
for medium term choose the 6 MONTH with 18 DAY MOVING BASE
for long term choose the 1 year with 50 DAY MOVING Base
1. if i feel a stock is showing some momentum, or new is on the way, i am looking for the stock to cross the green upper line, after trading below it OR merely trading sideways within the lines. I would initiialy look at the 3 mnth chart. For exmple if you follow my threads on CHL, i identified a few days ago that it was going to cross its upper bollinger line on the 3 month chart, and if you follow the share price it has done this, AND gone up 10%+)
2. once crossed i want CHL to stay ABOVE or TOUCHING the upper green line, if it keeps doing this then it is a good sign that CHL has entered a new short term trading channel.
3. it CAN drop beneath it AS LONG as it DOESN,T fall through the lower bollinger line, as this can be bearish.
4. then spread the net, and check the medium term and long term bollinger channels to gain greater confidence that CHL is breaking " bollinger upper resistance.
these are the basics so PLEASE ASK questions or CHALLENGE my ideas to help me develop my trading.
atb
The contents of all 'Chat' messages should not be construed as advice and represent the opinions of the authors, not those of London South East Limited, or its affiliates.
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