Technical Analysis Basic Crash Course

MODULE 5: What you will learn!

Now you have come a long way. Yet, as ever there is still an awful lot to learn and to get to grips with. In module 5 your mettle is really going to be challenged. This is where we cover the main nuts and bolts of the techniques that will, and should lead you towards a more profitable future as a trader.

  1. You will begin to learn REAL technical analysis
  2. You will discover the exact tools that I prefer to use, why I use them and how you can use them also.
  3. I will teach you how to read Japanese candlesticks and apply this to your own trading.
  4. and a great deal more…..

Welcome! This is a huge module that will take some reading. However, from studying this module you will learn the EXACT tools that I have used and perfected over time.

Technical Analysis Tools

When you first have a look at some of the software programs or some of the more advanced charting services available to you online, you will no doubt notice the myriad of tools available to you. Very soon I will be telling you about the ones I use.

Technical Analysis is about spotting trends and price movements, using tools and techniques. We do use some technical analysis tools from the 50+ that are available to you. What I want you to know is that 99% are a waste of time – DO NOT BOTHER!

There are some incredible Technical Analysis (TA) tools available and most of these have increased hundred fold since the use of computers in spotting trends. Don’t forget, the Dow Jones Theory was first noted over 100 years ago, all he had was a pencil and some paper. We now have immense power to data mine (break down data based upon entered criteria) and then overlay and/or apply markers upon the chart using many of the TA tools that are available.

The great thing about these tools is that they look incredibly impressive; all very technical sounding and add all sorts of pretty lines and images to charts. Also, when you see them working with historical data, they look incredible. When you speak to someone or a company that has developed these tools, they tell you using historical data, how incredible and accurate these tools are at ‘Predicting’ chart movements.

Do you want to know what I think? I think they’re talking rubbish! Why? Well the majority of tools look really impressive with historical data, and by using historical data and applying that tool, you see where the tool would have been pointing at a particular trend. So what’s my argument, surely that’s good! Well it would be fantastic, if they could work half as well using live real data. My argument is that the majority of these tools do not predict a price movement in time, they only predict the price when it has moved, by which time it serves no purpose to anyone; except to make an obvious price movement, more obvious.

I’m not saying that these do not work as far as pointing out trends. They are just not good at predicting trends ‘WHILST’ they are happening or just ‘PRIOR’ to them happening.

As you know our money is made on price movements. The stronger and greater the price movement, the more money we make as a result. Regardless of which direction they are directing. Therefore, if we use these tools; and I would say pretty much 99% of them are rubbish except the 1% (3 or 4 I use tops) are any good.

My other argument with many of these so-called wonder tools is that they’re so complicated. You need to be a mathematician to figure out how on earth to use them. In fact there are many books written just on the use and application of any one technical analysis tool, which to me is ridiculous. The whole idea of a tool is to make my time and energy more effective. Not justifying the expense of the software or the technical analysis tools by its over complexity.

These crazy and complex tools, I am sure, are designed for people who like to have a justification for their jobs. They will go on courses, spend thousands on additional software, etc. etc., to learn how to setup and use these overly complex programs.

What I would like you to do now is to download a demo program or order a demo disk from one of the many software vendors available (say ShareScope or eSignal or even the nice Pro-Realtime charts available at IG Index). Now don’t forget the software developers DO NOT WRITE the code for the tools, they are usually licensed so these technical analysis tools can be used. Get some software, have a look at the myriad of tools and then try and use them – they will look impressive, you will probably understand their use, if not search the web there will be volumes on just one tool.

From looking at these tools you will become more aware as to their obvious complexity and lack of any real key value in spotting trends during or prior to them happening. Now I am sure they have their uses, but not for us. We need to know about movements that are about to happen or are happening so that we can benefit from them. Without this ability to monitor a chart and subsequently see coming price movements, we might as well join the ranks of the amateurs that lose their deposit within a few months.

Now, please don’t misunderstand me or think that I have become all high and mighty. All tools have a purpose; many of the ones that we don’t use in the short term are used over a long term to reaffirm a trend that has formed. To me personally, I find that reconfirming a trend only wastes my time further. Yes, we do trade trends when possible and we do look for them, as well as using a combination of other techniques that allow us to profit from none trending markets. However I don’t want to spend, and I don’t want you to spend all your time spotting a trend which after some simple practice become obvious just by looking with your naked eye.

So where does that leave us if we don’t use all those fancy tools and tricks? Well, we will be using some of the tools. The good news for you is that we will be using the most common and therefore freely available tools both on the Internet and on even the most basic of charting software.

These means to you that you don’t have to spend a fortune on the latest software. In fact if you spend any more than $100 on the software then you’re wasting your money. Anyway, most of the tools are also available to you online, so don’t worry if you don’t even own your own PC and only have Internet access through the use of Internet Cafe. Plus let’s not forget, as a student of Insight Support Ltd, you gain access to the student website, that has its own charting application built in. I will talk a little bit about software later within this course, just outlining some of the things that I would suggest that you look out for when you are in the market for such a product.

So where does that leave you and me then? Well as I said we only use the basic and easiest to use tools. Time and time again, these tools that are easy to read, use and apply, producing incredible and accurate results, what’s more, once set up, you won’t ever have to touch them again. I shall also point out the additional techniques that I use. By this I mean, just by looking with your eyes and drawing some lines using the draw tool for the chart, you will further affirm your chart and trend either up or down; spot points where the stock can breakout, bounce and more. Then just to add a bit of extra ‘Salt & Pepper’ I shall give you some easy to understand Technical Analysis techniques that I apply to charts, what they are, how they work and how you can use them yourself. At the end of which you should be in the position to understand the technical analysis and read real charts and fundamental data on trades that we are looking to make. Of course it doesn’t end there, we have both online and off-line support to further empower your training.

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