How to correctly understand the technical analysis of stocks Money Tips

Category: Money tips Release Date: 2006-01-08

As opposed to fundamental analysis, technical analysis on the market have a grasp of the details of a very large leap forward. Transactions due to technical analysis a great help, but also led to a lot of elite people who put a lot of energy into this area, which ultimately led to where we can easily find a lot of books on technical analysis and a variety of different theories. The scope of these theories is very wide, there are many or even develop into a four-dimensional, or the metaphysical level. Is very interesting is that each seems to have a very strong theory supported by empirical evidence. It also makes a lot of people have all the technical analysis as their pursuit.

Here, I am not critical technical analysis is useless, I want to say is that we should not be completely obsessed with this, in a large number of technical analysis, we should also remember that our ultimate goal is out of the technical analysis.

Technical analysis is the mainstay of the market and trading in this market, the crowd mental activity can reach a market limit, its form and rhythm of movement and its direction of movement. Therefore, from this extent it is more realistic than the fundamental analysis because it is closer to the market itself, which constitutes the daily trading, technical analysis can achieve the standard of fundamental analysis is difficult to achieve. One reason, of course, is that technical analysis somewhat more emphasis on quantitative analysis, fundamental analysis is more emphasis on qualitative analysis of the transaction, in particular the financial leverage for the use of a lot of foreign exchange market, quantitative analysis Very often, qualitative analysis of more than practical significance.

However, we can see that technical analysis of strengths at the same time, we will never have to remember is that the market technical analysis, rather than technical analysis determine the market.

We often see some very classic pattern top and bottom, we may see a lot of very classical order form, I want to express is not the classic form of top and bottom of the market led to the decline, but the market down this process, the formation of the formation of of these classic forms. Market, buyers and sellers at a time process, for the current price would be a very delicate position of the psychological mindset, mixing a variety of messages and data, the overall market, people will carry out their different responses, and then back to the market last gradually lead to the two sides in trade transaction forces change. For the market, as long as the buying power of larger than the power to sell, regardless of what kind of messages and data, the market will rise even further. However, these data and information will gradually affect the market transaction in which the crowd for their own position to reconsider, and finally in turn affect the overall relationship between the strength of such sales. In such a power conversion process, in the technical analysis, we will see these classic shape, therefore, not because the first M leading the market down, but the market fell through such a process must buy gas from the strong turn weak, selling gas from weak to strong. The head and shoulders only shows the process of this transformation a bit more complicated, buying power and buying gas ratio M is reinforced by the first little bit. The V-Top is illustrated in the conversion of buyers and sellers because the price of location and the involvement of certain elements of the power conversion is more sudden and rapid.

While the corresponding order form in fact also indicated that the market forces of the two sides in the transaction by the fluctuations in a space of roughly a balance, but the transaction inconsistent views on the direction of the final turn into the same process. Which eventually led to the original buyer and the seller agreed in a trading range into a new balance of power imbalances and ultimately reflected in market, on a technical analysis to reach a breakthrough in the traditional sense.

Which is different from the trading point of view into the same process will inevitably lead to some form of price convergence patterns, which led to what we can see that there is a wide variety of finishing the triangle shape. While others such as the proliferation of triangular, rectangular shape finishing, they finally break through after the effect of many cases is not very good, often fail to see a breakthrough to exist. It also maps of the actual market transactions, point of view of both sides In fact, this process does not effective homogenization.

Of course, the actual market situation may be more complex than what I described, so they took last week, a substantial rebound in the dollar this week, I comment on Tuesday's exchange mentioned, even though I do not consider the technical analysis, I can learned this week and a half weeks ago the possibility of the dollar's retreat is very small, but some analysts through technical analysis of U.S. dollars will come down point of view. The real trend to prove that this non-technical analysis of the conclusions of the relatively more consistent with the actual market trends, it is to see the new high dollar will not easily fall before the point, you may have forgotten most of the technical analysis of the market back up such a large scale reasons for the market.

Will always be market-determined market, technical analysis will not determine the market. This argument will lead us to enter the market in the end what is the problem, we have to remember that the market is one in itself will not produce wealth, but only complete the transfer of wealth in a specific place game populations. Into this place all the games people want to get through this place the property rather than lose the property. But in the end result is always and most of the game not the same as the idea of the crowd, the market can always successful completion of the transfer of wealth, while the completion of the transfer process must show that at least 70% of the investment eventually wrong, lose money, and their property has been re-allocated. Imagine, we know that make these populations in the elite willing to become the distribution of the object is not an easy thing, the market can do is the only way to make everyone through a variety of errors. Fraud, deception, deceive, use, use, re-use will always be the sole subject of the market. We see at the bottom of the "in" shape to adjust the general response is that the market would have to determine accurate investment eventually because of the frequent up and down price movements have lost confidence and patience to hold the best portrayal, while the bar space and induced multi-phase that is, corresponding to the market some of the investors have lost patience and confidence in the process. Therefore, the important thing is to market itself. As we enter the technical analysis in this area, we should remember that it's just to help us understand the market as a means and tools the most important thing is still the market itself.