Technical Analysis - all that chart craziness

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Darin_IHB

New member
I've seriously tried to understand technical analysis a couple of times. Each time I left thinking, there's something there, but as far as I can tell it's either Greek (don't understand) or mathmagical (valid if assumptions are true e.g. statistics).





Can someone point me to a good primer about it? Every time I hear support and head-and-shoulders and diamonds, I have this pinch of frustration then I fall back on my fundamentals.
 
I am a big fan of <a href="http://www.tradethemarkets.com/">TradeTheMarkets</a> if you want to learn about trading. Also, <a href="http://www.tradingmarkets.com/.site/">TradingMarkets.com</a> is a good site. Both sites are run by professional traders who really do know what they are talking about. You can also check out <a href="http://www.traders.com/">Stocks and Commodities magazine</a>, but be careful -- the search for the holy grail of indicators is like pursuing a false religion: it won't lead to profitable trading. I stay away from that publication. There is a LOT of crap out there. If you think you want to get in to trading, I suggest the brokerage I use: <a href="http://tradestation.com/default_2.shtm">TradeStation Securities</a>. They have one of the best execution platforms available, and if you know how to program, you can write your own trading code and go fully automated.





Basically, the shorter your timeframe, the more important technical analysis becomes and the less important fundamentals become. If you don't study and utilize technical analysis, you probably should not invest in individual securities. Mutual funds and market indexes might be kind of boring, but they are the best way to go if you don't have the time nor the inclination to actively manage your own investments.





I have been actively trading stocks, options and futures for 7 years. I may be able to answer some of your questions or point you in the right direction.
 
Darin - Fundamental analysis and technical analysis are both useful for short term trading and long term investing. But technical analysis is a necessity for short term trading and not just useful, and fundamental analyisis is necessary for long term investing. And maybe of most import is self analysis; seriously. Emotions are the biggest hinderance to trading and investing.
 
Technical analysis is useful for any timeframe under 1 year.





Perhaps this concept might be helpful: Technical analysis looks at what has happened to try to guess at what will happen, and fundamental analysis looks at why stocks should go up or down to guess at what will happen. Both are a guess.





Fundamentals don't forecast what is going to happen today, and technicals don't forecast what is going to happen a year from now. Any timeframe in between will need some combination of the two. You cannot trade successfully without technical analysis, and you can't invest successfully without fundamental analysis. It all depends on your expected holding period.
 
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