Stock Technical Analysis Course and Various Trading Methods - By: Charles Drummond

Never before have I seen anything like the plethora of methods that are appearing for use in price forecasting for commodities. Hundreds or different approaches and techniques are out there. Here we'll only briefly look at a few .

Some are conservative and those I use personally I'll put an asterisk beside. Within this chapter there are 36 mentioned ways of price forecasting . This does not take into consideration all the wonderful glorious little tidbits that can be provided through a P&L charting technical analysis course.

(This author is very happy with P&L charting , for it enables this trader to quantify price action on a daily and intra-day basis . There is no other system I know of wherein each day's specific activity means more than the trend or congestion in which the prices are being traded. Each day's activity through the use of P&L charting can show the evolution of a congestion or trend, often in just a day . )

Actually, I become quite irritated by those who believe that their resistance index, moving averages, point and figure, volume oscillator , and who knows what else, - cash and basis, - are the only system which is effective. And, the system they use is the only effective one and that they have no use for volume, open interest, seasonals, fundamentals, contrarian opinion, wave theories, point and figure, moving averages, oscillators, chart patterns, momentum indices, whatever , and are blindfolded to the evolution of anyone else's approach . ( There . I got that off my chest .)

Often these traders don't use systems of their own and seem to me, at least , to always be fighting the market . Assuming they have taken a technical analysis course and they have a plan for trading that combines various price forecasting methods and they are combined to help him profit from the market continually, then this trader is worth listening to . In the section below that is on planning, the author will portray his own market place approaches and you will be surprised how flexible he is .

You'll find 3 basic methods used to help analyze commodity price behavior on the market.

1. fundamental
2. mechanical
3. technical

FUNDAMENTAL

In some cases the market ends up going opposite of considerations that are fundamental due to factors like technical ones. Fundamental traders are interested in the price movements that are long range and have to be ready to wait . Fundamentalists may deny it , but there are just too many external factors to be taken into account , such as the natural response to fundamental influences , reflected in the fluctuations day by day . So there's no need to seek them out for analysis .

MECHANICAL

The mechanical methods only use price to determine what action to take and the action doesn't require a trader's decision . Three mechanical methods exist .

1. chart
2. computer summaries
3. moving averages

Taking a technical analysis course will teach you to follow the rules of trading faithfully and in most cases it's based on a formula that is mathematical to help predict the right trading time . A computer uses the mathematical formula and tells you what it thinks that you should do . One great thing about this method is that back checking can be done. Methods that are computer oriented are often biased towards trend analysis that is mathematical , using various trading systems, like moving averages . Your computer can become a chart reader and it can formulate and test any and all decision rules .

TECHNICAL

In past decades, a vast amount of work has been done to erect a means of technical tools , - all trying to use trading statistics to anticipate the futures prices, for example, volume, O.I. and price .

When it comes to the technical approach, there are four different areas.
1) price charts and their patterns
2) methods of trend following
3) character of market analysis
4) structural theories.
There are many different methods for charting . The following are the most popular :
a. bar charts for high/low/close each day
b. the method of point and figure
c. the average that moves of the prices at closing

Technical analysis lists of various approaches can be cataloged by the following technical approaches .
1) tape or board reading
2) price chart analysis - which includes
a. price trends
b. resistance and support
c. consolidation ( continuation and reversal )
d. prices and the patterns and formations
e. measurement rules
f. wave theory
3) open interest analysis and volume
4) other different technical indicators including the following:
a. relative performance measures
b. studying the periodic price performance
c. opinion survey and contrary opinion

There will be more of this later .

About the Author

Author: Charles Drummond is a Canadian trader who has written nine books about trading and has created a stock technical analysis course called “Drummond Geometry.” His biography and further information about his work can be found at the stock technical analysis course website.

Article Directory Source: http://www.articlerich.com/profile/Charles-Drummond/70394

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