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Technical Analysis for Beginners Reuters pdf. Technical Analysis for Beginners: Where to Start? Forex technical analysis

The foundation of intraday trading is technical analysis. The most important thing for novice traders is to start by mastering it. Through technical analysis, you can learn to understand charts and predict price changes.

What it is

Technical analysis is an approach based on working with various charts, oscillators and information related to the price history. Without it, adequate trading, forecasting the value of currencies and understanding the market are impossible.

Includes many methods, such as technical analysis patterns, ways to display information (candlesticks, bars, lines, area, Heiken Ashi indicator, etc.), as well as hundreds of popular indicators, tools for drawing on top of charts, and much more. Its essence is that a trader finds certain patterns in the available information, and based on this, a forecast is born.

Where is technical analysis needed?

It can work almost anywhere: foreign exchange, derivatives and stock markets, resources, goods - in general, any data plotted on a chart. Why is it needed? To predict further price action. For example, if you take the euro / dollar currency pair and data on it for a certain period, then on their basis you can build a forecast of price behavior in the future. There is no fundamental difference with which trading instruments you will work: futures, options, or even with - your assistant.

Start date

Technical analysis for beginners is a headache. You can and should study it endlessly, during all the work associated with trading. If you have chosen this path, then you need to improve constantly.

The work is hard enough and requires diligence. Endless charts, numbers, various additional tools, programs, robots and much more - all this is technical analysis. A course for beginner traders should contain at least the basics, namely: candlesticks, trend lines, support and resistance, the simplest indicators, the concept of a timeframe, and some other things.

Types of graphs

In fact, there are not many of them. The most popular option is Japanese candlesticks. By the way, they appeared even before trading, stock exchanges and the Internet in general were born. The second option is bars. These are such stripes with lines. They are somewhat similar to candles, but they have a different appearance, although they show the opening and closing prices in the same way. There is a simpler option that newbies love so much, but it is practically useless. This is a common line. You can't really see anything on it, it is almost impossible to track any figures of technical analysis, maximum you can understand the current direction of the price. Nevertheless, any options have the right to life. There are other more exotic types of charts, but they are not popular.

Timeframes

Many will be scared away by such a complex foreign name. Nevertheless, it is impossible to understand without this. In the terminal of your broker or on a third-party resource, each asset has its own periods of information display. Namely:

1 minute (M1).
5 minutes (M5).
15 minutes (M15).
1 hour (1H).
4 hours (4H).
1 day (1D).

These periods may be slightly different depending on your service provider, but the above are the most common and used ones today. It is advisable to read about the relationship of these periods and understand that the younger ones form the older ones. So there is no way without it.

Trends

These are price directions. The price can have only two directions, namely the up and down trend. However, there are still lateral movements. It is a kind of uncertainty when the price fluctuates and cannot choose a direction. In addition, trends have pullbacks. This is when the price goes up, for example, but it cannot do it continuously, and a slight decline occurs. This is normal, as is market noise. The golden rule of trading is to trade only according to the direction of the price.

Indicators

This is more complicated. Technical analysis for beginners is a tricky business. And when it comes to various chart indicators, it gets even more difficult. The most popular indicators will be listed below:

Relative Strength Index (RSI).
Stochastic Oscillator.
MACD.
Bollinger Bands.

Each of them has its own tasks, so it is recommended to study each one separately. Try to search for information about these indicators separately or use the help that brokers often offer on their platforms. These tools are often used in trading strategies, but there are countless of them in various combinations and variations.

Parting words

If you decide to seriously engage in foreign exchange trading, then read the literature and forums, study various and other information. As you already understood, the most important thing is technical analysis for beginners. A book about one thing will not give a beginner a big picture, so it is best to look for information on forums and in various schools.

Fundamental and technical analysis for novice traders is a must in the training program. The whole point is that to succeed and make a profit in trading in the stock and foreign exchange market it is possible only if the trader understands in which direction and for what reasons the price of the asset is moving, and how events will develop in the future.

Fundamental analysis establishes a connection between this movement and external influences, such as natural disasters, important political events, news of the world economy. To understand this type of analysis is quite simple, but difficult to master and apply, since for confident forecasting requires significant experience and taking into account many factors.

In this respect technical analysis working only with the price of a trading instrument is somewhat simpler. Although at first, its perception may be difficult, primarily due to the use of many mathematical methods and algorithms. In the future, the use of his methods and technologies will become habitual and will help to consistently earn money in any markets.

Technical Analysis Books

Technical analysis is a rather difficult topic for independent study. The models and methods used in it have many nuances that need to be taken into account when considering the market situation and making decisions. Naturally, those who attend offline or online various courses for beginners offered by brokers, specialized companies or resources, independent traders also undergo technical analysis training, where they receive specific information in a processed form.

This is a good path, however, it is associated with the need to adhere to a strict schedule of classes and, more often, it is paid.

Those who wish to undergo training for free and obtain a high level of quality knowledge should be guided by good books on this topic. There are an abundance of such on the Internet. First of all, you should pay attention to such works that have become real classics, such as:

"Technical Analysis from A to Z" by Steven Akelis.
"Technical Analysis" by Michael N. Kahn.
"Technical analysis futures markets: theory and practice ”by John Murphy.

But, unfortunately, not all of them present information as easily as it makes the series of books from the publishing house Dialectic "..for dummies" beloved by many.

For beginners who want to quickly master trading using technical analysis, there is a great option - Reuters book "Technical Analysis: A Course for Beginners." It is part of the Reuters for Financiers series and allows everyone to get acquainted with the basics of technical analysis, even those who do not have an entry-level specialized knowledge. You can download the book in pdf format on many sites.

After getting to know it, it will be much easier to perceive any video course and excellent books by specialists such as Alexander Elder, focused on knowledgeable traders in technical analysis, Bill Williams, Thomas Dorsey, Ralph Elliott et al.

The essence of technical analysis and its main provisions

Technical analysis is a special approach to examining the processes taking place in the market and predicting its behavior in the future.

Unlike fundamentalwhich takes into account the influence of external factors, it is based solely on the study of behavior past asset prices ... For a trader using technical analysis, no other factors other than prices , do not matter.

This approach is based on several axioms formulated by Charles Doe. Currently, this type of analysis uses three main postulates:

The price takes into account everything. This means that the dynamics of price behavior is determined by the whole set of data and factors - supply and demand, economic news and political events. Accordingly, the trader does not need any additional information - all predictions can be made only by analyzing the price.
There are trends in the market (models, trends). The price does not move chaotically, but has a certain logic of behavior. Accordingly, recognizing such patterns, a trader can receive a reliable forecast with a high degree of probability.
History repeats itself. There is a high degree of probability that the model, once formed under certain circumstances, with similar initial data will be implemented again. Finding such a model and using it to carry out transactions in the market is the goal of technical analysis.

Pros and cons of TA

This understanding of technical analysis determines its main advantages and disadvantages.

The advantages of the method include:

Versatility - the same approaches and mathematical apparatus can be used for any markets and assets - stock trading, transactions on the Forex market, working with binary options and futures contracts, etc.
Amount of evidence - analysis can be carried out on the entire available history of a trading instrument, allowing you to get the most viable models that work for a long time.
Variety of tools - any available methods can be used to process data, from strict mathematical relationships to probabilistic and other tools, for example, from the field of statistics, the theory of neural networks, etc.
Ease of use - after the development of appropriate calculation algorithms, practically every trader can apply them and use the results of their work.
Accuracy - only actual data is used in the work, and broadcast in real time or with low latency.

Significant disadvantages of technical analysis:

When interpreting the analysis results, it is impossible to get rid of subjective factors - each trader makes his own conclusions.
Over time, the behavior of the masses of bidders undergoes changes, due to which some models lose their relevance and new ones appear.
As a result of technical analysis, we can only talk about likelihood of events but it is impossible to argue that such price behavior will certainly take place.

In addition, we must not forget that the complication of algorithms and methods of analysis requires the use of powerful computing systems, and the accuracy and promptness of information receipt are of paramount importance.

Types and tools of technical analysis

A trader who decides to use technical analysis in his work needs to know its main types. Until recently, only:

Graphic.
Indicator.

The first is based on plotting (searching) prices on a chart according to certain rules graphic objects:

Trend lines, reflecting the direction of development of trends.
Support and resistance levels , on which the special behavior of the instrument is manifested (various methods are used, including Fibonacci, Di-Napoli, Gann, etc.).
Price channels (including dynamic ones, such as regression ones) in which the price moves.
Pattern Recognition and their confirmation.

Indicator the methods use mathematical processing of historical quotes, as a result of which the movement of the price chart is converted to a certain type of curves. They are called indicators. Indicators have characteristic points and areas (zones), and their behavior is more predictable. Based on their behavior, the trader makes a prediction of price behavior.

Currently, thousands of different indicators have been developed, most of which can be attributed to the following types:

Trend, reflecting the emergence and development of trends.
Oscillators (leading, differentiating), based on the behavior of which it is possible to draw conclusions about a change in the direction of price movement.
Volume indicators.

Since it is much easier to analyze indicators, it is easy to create a coherent trading system based on them.

Currently, with the increase in the power of computer technology used to analyze the market situation, the arsenal of technical analysis methods is being replenished. In addition to the graphic and indicator, a modern trader can use

Statistical and probabilistic techniques.
The theory and methods of neural networks, including quite complex ones.

Most of the methods ceased to exist in clean form. A lot of developments (indicators) for various terminals have appeared on the network, which implement, for example, the construction of Fib levels or regression channels in real time.

In a word, technical analysis has become a powerful tool available to everyone.

Moreover, since the rules of trading using technical analysis methods are much easier to formalize, it became possible to create mechanical trading systems (MTS). Such "trading robots" can conclude and accompany transactions without human intervention. This will ensure the strict implementation of the rules of the strategy, removing the subjective factor.

Their main problem (more precisely, the problem of their developers) remains the exact identification of price behavior patterns and the changing market response to various sets of factors over time.

Technical analysis is becoming a tool that will help a beginner navigate a difficult market situation. Moreover, in addition to understanding the price behavior, it will make it possible to formalize the rules of trading systems at a more understandable level. And even a relatively simple strategy that predicts with a high probability of development, with a minimum of transactions and a level of risk, will bring tangible real profits.

The Russian edition of the book was prepared with the participation of the Moscow office of the company Reuters

Published with the assistance of JSC "Admiral Markets"

Editor A. Stetsenko

Scientific editors A. Ilyin, V. Ionov

Interpreter A. Polovnikova

Corrector D. Globa

Technical editor THEM. Dolgopolsky

Commissioning Editor A.V. Petrogradskaya

Layout designer A.O. Bohenek

All rights reserved. No part of the electronic version of this book may be reproduced in any form or by any means, including posting on the Internet and corporate networks, for private and public use without written permission from the copyright holder.

* * *

To readers

Ladies and gentlemen!

We are pleased to present you our new project - the publication of a series of textbooks for students of Russian economic universities and beginners in the banking and financial sector.

This project is a continuation of a large educational program for the training of qualified personnel for financial institutions and markets in Russia and the CIS, which Reuters has been implementing over the past 7 years.

Today, Reuters is the world's leading organization for the dissemination of news and financial information. In 2001 the company celebrated its 150th anniversary.

Reuters is unmatched in the amount, complexity and sheer volume of information supplied to banks, the media and an ever-growing number of other business subscribers.

All of the world's leading banks, brokerage companies and financial institutions use this information to trade, large companies use it to study markets and competitors, and the world's media use it to create print, television and radio programs.

We hope that our manuals will be of interest to you and that this will be the beginning of a fruitful cooperation with Reuters.

Respectfully,
Ricardo Torres,
general Director of Reuters AO

Acknowledgments

The publishers and Reuters Limited would like to acknowledge the invaluable support of this book:

Collin Nicholson of the Australian Technical Analysis Association for a thorough review of the book and constructive advice;

dr. Keith A. Rogers of Training and Learning Design, who wrote and designed the first version of this book;

Charles Kaplan, President of Equity Analitycs Ltd, for permission to use terms from his technical analysis vocabulary at the end of the book;

Haksu Kim of Pacific Investment Research, Inc. - for using his list financial markets the world at the end of the book;

Ahsoka Markandu, Tracy Khu, Tai Liam Hwi, and Michael Turlington of Reuters Asia Pte Ltd for support and advice.

Also thanks to Dow Jones & Co. Inc. for providing a photograph of Charles Doe and the right to use it.

Preface to the Russian edition

Dear Readers!

We present to your attention a book published with the support of the international brokerage company Admiral Markets. The book "Technical Analysis" continues the series "Course for Beginners" from the world famous financial news agency Reuters. Admiral Markets prefers to cooperate with professionals in their field, so we decided to sponsor the publication of all books in this series in Russian. It includes the most popular training manuals for traders and analysts, who in the future will have to apply their professional skills in practice every day.

The book you are holding in your hands is a systematic guide to the technical (graphical) analysis of stock prices. Exchange rates, the dynamics of the value of stocks, futures and other financial instruments - this is a wide field for the application of modern technical analysis. Close attention is paid to the practical use of the described techniques and various technical indicators, therefore the book is rich real examples, graphs and explanations. If you want to learn something new, interesting, relevant about the international financial markets and comprehend the main facets of mastery in interpreting and predicting the prices of financial assets, guided by all the possibilities of technical analysis for the adoption of highly profitable investment decisionsthen this is undoubtedly the best book for you!

The main goal of Admiral Markets is to make trading in the financial markets as accessible as possible for everyone and everyone! In connection with the merger of Admiral Markets and UMIS, new instruments have become available for work - CFDs on shares of Russian companies, the RTS index, entry to the stock exchange of the Russian Federation and many others. It also became possible to open new accounts of the FX + system, absolutely all transactions for which are registered at St. stock exchange... At your service, among other things, there remains the possibility of trading in CFDs of shares of the largest US corporations listed on the New York Stock Exchange (NYSE) and the NASDAQ electronic exchange, as well as trading any of 45 currency pairs quoted by the company.

The modern, intuitive and multifunctional MetaTrader 4 trading terminal, which you can download for free on the website of our company, will help you to successfully master and test in practice the strategies and examples described in the book. A real or demo (demo) account is opened in 5 minutes online from anywhere in the world. There are still no minimum deposit requirements, and you can start trading from $ 10-50. We accept bank transfers, payments by credit cards, electronic currencies.

In 2007, a unique bonus program Admiral Club ™, which currently has thousands of our clients. Every year the company also organizes international trading contests with substantial prize pools for everyone. By trading on demo accounts with virtual money, you can earn real cash prizes!

Since 2006, Admiral Markets has been a member of the Commission for the Regulation of Relations between Financial Markets Participants (KROUFR), and also has an exchange broker license No. 1203 issued by the Federal Service for Financial Markets for an unlimited period of time. In addition, since 2009, our company has been licensed in the European Union and regulated by the unified financial legislation of the EU, including the newest Markets in Financial Instruments Directive (MiFID). The Financial Conduct Authority of the Republic of Estonia (FSA) has issued our central office in the European Union, Admiral Markets AS, a license to carry out the main types of investment and brokerage activities, including the Forex market, stock markets, futures and contracts on price difference (CFD). The license (No. 4.1–1 / 46) is valid in all 27 member states of the European Union.

The company also actively promotes educational courses and practical training programs designed specifically to enhance the knowledge and experience of novice traders. Free seminars and courses are regularly organized in all offices and representative offices of Admiral Markets, the purpose of which is to improve the trading skills of existing players and show all the real possibilities of the Forex market to those who have not encountered it before. For independent study of financial markets, UMIS offers a free distance learning package, which you can connect in your personal account (http://www.umis.ru).

Information for inquiries and company contacts

Admiral Markets corporate website: http://www.forextrade.ru

Phones of the unified reference service:

8-800-555-75-08 (within Russia - free of charge),

8-495-775-75-08 (Moscow).

Head office address in Russia:

123317, Moscow, Presnenskaya nab., 10,

block C, tower on the embankment, office. 568.

Before you start ...

Who is this book written for?

This book is written to introduce the methods of technical analysis to a wide variety of readers: traders, back-office employees, educators, managers, private investors seeking to learn how to use technical analysis to implement trading strategies. Anyone starting to learn technical analysis can use this book as a foundation. Technical analysis is not an easy discipline, so readers of this book may need to study many more books in the future.

Despite its complexity, technical analysis is no longer just an investment expert's tool. With the advent of publicly available sources of historical data on the state of the markets (in particular, such as Reuters) and the possibility of accessing markets via the Internet, technical analysis becomes relevant for all market participants.

This book will give you an understanding of the basic principles of technical analysis - from the creation of the first charts to the concepts on the basis of which complex analytical tools are developed. After studying the book, you will learn how to use the basic methods of analysis and choose the most appropriate ones in each case.

You will also be able to apply the knowledge gained to study or work in the specialty "technical analysis" at the ACI.

What will you find in this book?

This book contains a new approach to obtaining basic knowledge of the basic concepts of technical analysis, the importance of which in modern life continues to grow. The book is written in an accessible language, it contains a minimum of special terms and their clear definition is given.

It is especially valuable that the book provides an opportunity to consolidate the material studied. Each section contains an explanation of basic concepts with practical examples. Exercises and short tests will help you consolidate what you have passed. Each chapter includes a short but comprehensive overview and a list of recommended reading on the topic at hand.

How is this book compiled?

This book includes the following sections:

Before you start ...

Current section.

Introduction

Summarizes the history of technical analysis and Dow theory.

Types of graphs

This section describes the basic methods of presenting prices and financial data on charts and lists the features of the application of each type of charts.

Classic chart analysis

Sell \u200b\u200bor Buy? Plotting can often identify patterns that aid decision making.

Indicators

Is it possible to predict the market trend? This section describes the different types of indicators.

Waves, numbers and cycles

Are markets really cyclical and can be described by wave patterns? Are markets governed by mathematical laws or are they chaotic?

A day in the life of a technical analyst

What it looks like in reality.

Throughout this book, you will constantly come across in bold important terms and concepts, for example dow theory... In addition, special icons will remind you of what to do to get the most out of the material.

This icon indicates a definition of a term that is important to understanding the material.

This icon seems to say: "Stop and think." You can also write your thoughts in the empty box that you leave.

Technical analysis for beginner traders

Hello everyone, friends. They invited me the other day to conduct a lesson at a trading school.

They do not have their own teaching staff, so they periodically attract people from outside.

And it's never hard for me to share useful knowledge with my listeners. This time we analyzed technical analysis for novice traders.

We considered all the subtleties and nuances. I don't want to useful information passed you by, dear readers, so now you will find a detailed presentation of technical analysis. So let's get started.

What is Forex technical analysis

Technical analysis is a statistical and mathematical analysis of previous quotes with forecasting subsequent prices.

The initial data for Forex technical analysis are prices - the highest and lowest prices, the opening and closing prices for a certain period of time, the volume of transactions.

Any factor influencing the price - economic, political or psychological - is already taken into account by the market and included in it.

Technical analysis is based on three assumptions:

Market movement takes into account everything.
Prices move directionally.
History repeats itself.

This type of analysis is a series of charts displayed in the trading platform.

Charts accurately show the direction of price movement, or the so-called trend, in real time. Most small and medium-sized players in the financial markets rely on technical analysis.

Source: https://www.fxteam.ru/forex-library/technical-analyse/

TA of the foreign exchange market

Technical analysis of the foreign exchange market The main way to research the Forex market is technical analysis, which is the prediction of future price movements based on their past behavior.

With its help, you can trace the fluctuations market value and determine its possible rise or fall.

Most often, technical analysis is used to track pricing in stock and currency exchanges.

The forecast of price changes is based on the analysis of the so-called "charts" - time series of prices. In addition, other statistics are used, for example, trading volume.

Technical analysis considers only the fact that the price is moving in a certain direction, without considering the reasons for this movement.

The correct recognition of the trend helps to determine the position and generate income in any market.

When evaluating the information obtained as a result of technical analysis, the trader receives all kinds of forecasting tools. Most often, when analyzing the foreign exchange market, they rely on:

Technical analysis tools
- Fibonacci (Fibonacci Time Zones, Fibonacci Arcs, Fibonacci Channel, Fibonacci Grid, Fibonacci Fan)
- Channels and others (Andrews Pitchfork, Linear Regression Channel, Standard Deviation Channel, Equidistant Channel)
- W. Gann (Gann Fan, Gann Lines, Gann Grid)
Technical analysis indicators
- Trend (zigzag indicator, Ichimoku Kinko Hyo, ADX indicator, CCI indicator, Bollinger Bands, Moving Average, Parabolic SAR, Standard Deviation)
- Oscillators (ATR, Envelopes, Bears Power, Bulls Power, Relative Strength Index, Relative Vigor Index, Stochastic Oscillator, Williams Percent Range, Force Index
  MACD, Momentum, DeMarker)
- Bill Williams and Volumes (Awesome Oscillator, On Balance Volume, Acceleration / Deceleration, Market Facilitation Index, Money Flow Index, Indicator, Alligator, Accumulation / Distribution, Fractal Indicator (Custom!), Gator Oscillator)
Japanese candles
Technical analysis patterns
Forex graphical analysis

But the most effective assessment tool is the combination of all methods of forecasting price movements.

Axioms

Price changes reflect all information... This axiom says that all the information that is needed to analyze value is already included in the price and trading volume. And the dynamics of their ratio can predict the development of the market.

Technical analysis is convenient in that it does not require the study of all external factors affecting the foreign exchange market, and makes it possible to quickly and accurately get a forecast.

Price movement is subject to trends. The meaning of this statement is that price movement is not a random quantity, but has certain trends.

Therefore, it is possible to split the time series of prices into intervals during which the change takes place in one direction.

Therefore, the charts of price changes have a smooth wave-like shape, consisting of peaks and dips.

Attention!

Hence, there are three main trends in the development of the Forex market - an uptrend (when the price rises), a downtrend (the price falls) and a sideways trend (the price is unchanged).

History repeats itself. The essence of the axiom is that every event, be it the history of mankind or the situation in the Forex currency market, is repeated, because the reaction of the participants remains the same.

And knowing the past, one can easily predict future situations. Studying the events in the market, one can find similar ones in the past, view their development and draw conclusions about how they can continue further.

Based on this axiom, a number of traditional typical patterns ("figures") have been developed to predict price behavior. The earliest method for analyzing the market is the candlestick chart created by the Japanese rice traders.

Technical analysis methods

To correctly and most accurately predict price movements in the foreign exchange market, many methods of technical analysis are used.

The main and oldest method is graphical analysis based on charting. They clearly demonstrate the behavior of prices in Forex, forming typical patterns by which you can easily determine the direction of movement.

Various types of patterns are distinguished: continuation patterns, which make the conclusion that the price will move in the same direction, reversal patterns that indicate a trend change in the near future, etc.

This method does not have sufficient accuracy, but it is effective, convenient and easy to use.

Figures

Triangle Is one of the most common patterns in classical technical analysis. Despite the fact that this pattern seems quite simple, many traders often make mistakes when trying to interpret triangles.

In order for the triangle pattern to become a profitable benchmark, you need to clearly understand how it is formed and not confuse it with other patterns.

A triangle is formed with the help of two trend lines converging to each other. This happens when activity in the Forex market falls.

The classic, symmetrical triangle is a continuation indicator, but it comes into play only after the price breaks out of its border.

"Diamond" or "Diamond"... There is one rare, but quite effective, classic figure of Forex technical analysis - the diamond figure.

The appearance of this pattern on the chart predicts a price reversal, but here the following nuance should be taken into account: if a diamond appears on the charts with the H4 timeframe or less, then the reversal signal is weak, and in some cases the pattern indicates the continuation of the trend.

Thus, the diamond figure, as it is also called by traders, most accurately shows a reversal on charts with a scale of daily and larger.

Double top is a bearish pattern that appears after a northern trend. To recognize those. figures, pay attention to the behavior of the quotes of the trading instrument you have chosen.

After a trading instrument re-reaches strong resistance on an uptrend, but no breakout occurs and prices reverse and begin to decline, a double top pattern appears.

Most traders who adhere to the rules wait until the model is fully formed, for this it is necessary for the price to break the local minimum value on the chart, which is located between the two maximums.

Double Top shape... The formation of this pattern is accompanied by an increase in trading volume when the asset breaks up. The price can also come back down to the breakout point, this maneuver is considered the hallmark of the pattern.

Ideally, a Double Top should have two expressive peaks that are almost at the same level. At the same time, trading volumes at the first peak are greater than at the second.

"Wedge". Among all the tools used in technical analysis, the wedge pattern is one of the most remarkable.

In its shape, it very much resembles a triangle - with the only difference that both lines that form it are directed in the same direction.

As for what the wedge is signaling, it is an approaching reversal of a trend in the market, also called a trend.

Triple bottom or Triple bottom This pattern is bullish, which in the technical analysis acts as an indicator of the reversal of the southern movement. On the chart, the figure has the shape of three successive valleys, the height of which is approximately equal.

Head and shoulders... The most popular head-and-shoulders trading model is applicable to any market (stocks, futures, forex, etc.), as well as to any time frame.

It seems to be the most simple and accessible, both for professional traders and for amateurs.

The scheme is as follows: The price rises, forming more and more indicators. Then it goes down and creates a lower high. Based on this, we can conclude that the market must change direction.

However, behind the seeming lightness is hidden wrong decisions taken... In the same situation, professionals and amateurs take different steps, often opposite.

Double bottom... This shape is similar to the English letter "W". The emergence of this pattern means that the southern trend is coming to an end. This signal indicates that the pressure of buyers is strong and sellers are giving up their positions, and the southern trend will soon change to the northern one.

In other words, a “double bottom” will indicate that it is time to close short trades and open buy trades.

A double bottom is formed from two gradual and sequential lows. The pattern is formed by two rollbacks upwards, which formed two bottoms, and the market is bearish at the same time.

Flag... It predicts the continuation of an existing market trend, most often after a significant price movement.

What does the Flag look like? Like its real counterpart, it consists of two parts - a "flagpole" and a "panel". The first is the steep line of the previous trend, and the second is the corridor within which the price moves.

Note that the Flag pattern can be found quite often on charts and almost regardless of the selected time interval. It is determined both on 5-minute charts and on weekly timeframes.

"Saucer"... The Saucer pattern can be found on the chart at the time of the lowest market volatility. Ideally, at the moment of the pattern formation, there should not be a sharp change in the trend.

If, nevertheless, there is a surge in prices, accompanied by a powerful increase in the trading volume, then soon the price chart returns to a narrow range, and the smooth price movement continues.

"Saucer" is one of the types of long-term price growth patterns. The final formation of the figure can take several months. The saucer pattern is easiest to see on weekly charts, but there are exceptions.

Pricing model "pennant" occurs very often, especially during the development of quite energetic trends. "Pennant" is one of the most common price patterns of development (continuation) of the existing trend.

Pennant is unusually close to the flag price model and has a number of similar characteristics:

occurs on the chart after a fairly vigorous market movement, which is often represented by an almost straight line
in its essence is a kind of "pause" in the dynamic development of the trend
plays the role of correction for vigorously developing trends.

A more complex and laborious method of technical analysis is the mathematical forecasting method. This method is based on the use of various mathematical formulas and calculations.

With its help, so-called market indicators are built, which indicate the "oversold" or "overbought" of the market. The very same mathematical method is divided into two directions - "trend" and "flat".

The essence of the "trend" direction is the construction of the middle line according to a certain formula, which crosses the entire chart.

Depending on the level at which the time series of prices is relative to this line, assumptions are made about the long-term development of the foreign exchange market. The most difficult thing in this technical analysis method is to find a formula for building a trend.

The direction of trading in a “flat” or sideways trend is based on the construction of a line that refracted to show the proximity to price extremes.

Each method is scalable and at different scales trend trading may seem flat, and vice versa, this is the cornerstone of technical analysis, it is difficult to find a point of relativity from which to start reasoning.

And the last method of technical analysis is cyclical, which is based on the theory of cycles, according to which all changes occur cyclically according to the night-day type.

As a result of this method, integers are built trading systems (Forex trading robots), which are able to answer the eternal question of the trader: buy or sell.

Thus, using Forex technical analysis, it is possible to predict price movements with a high probability, thereby obtaining a stable income when working in the foreign exchange market.

Source: https://tradexperts.ru/Tehnicheskij-Analiz-Foreks

Forex technical analysis

The Forex market is changing and changing cyclically. What benefit does this promise us? The most direct: this means that situations arise regularly in Forex when price behavior becomes as predictable as possible.

And if we can predict the price, then we can make money on the market. One question remains: what is the basis for judging the predictability of the market?

Technical analysis - this is what helps traders to anticipate market behavior and increase their deposit.

Technical analysis is a way to predict price movements and control the situation that has arisen in the currency or stock market. The analysis itself is carried out on the basis of past trading days and financial transactions, as well as the demand for the currency.

When analyzing the technical analysis of the Forex market separately, Forex charts of price movement and tick volume (representing the number of perfect ticks per unit of time interval) are most often used.

Technical analysis studies the price trend line, which provides information in which direction the price is moving.

Let's consider several effective and not complicated methods of technical analysis on Forex:

Channel development is the construction of a support and resistance line connecting the most basic low and high of the price for a given period of time. These Forex channels show the direction of the trend. They can be plotted using special channel indicators that will improve the accuracy of plotting and speed up the analysis processes.
Trend analysis. Regular trend trading is the most profitable trading option in the foreign exchange market. To focus on the successful direction of the transaction, you should carry out the most detailed trend analysis. For detailed analysis, Forex trend indicators are used that display the direction of price movement, trend opportunities and sharp market changes.
Graphical analysis. With the help of graphical analysis, you can easily determine the future price change or confirm the current situation in the market. In application, this method is independent and does not require any additional funds to be attracted. However, due to the wide variety of patterns, beginners, and sometimes professional traders, may not find the emerging pattern in time.

Principles

There are various techniques and methods of Forex technical analysis. These principles are based on the Dow theory, which was created for trading on the stock and foreign exchange markets.

Technical analysis of the foreign exchange market closely interacts with the Dow theory and is based on the following principles:

The market movement takes into account absolutely all events that take place on the currency exchange and beyond.

Prices react to any news and changes in supply and demand, any movement speaks of an event that has already occurred. This expression is known by every trader who studies the technical analysis of the foreign exchange market.

According to Dow theory, the trend is divided into three stages:

bullish (high series);
bearish (series of lows);
lateral (the price is fixed).

Trend options:

upward trend (upward price movement has advantages over downward price movement);
downtrend (downward price movement has advantages over upward price movement).

In addition, the trend is divided into:

primary trend (analysis of price behavior for the year);
secondary (assessment lasts from two weeks to four months);
small (the shortest period of time, not exceeding two weeks).

The main trend is carried out in three stages:

market reaction to new facts, news and changes;
reaction to new events of the main market participants;
a change in the general mood of the market.

If we use the statement “Equal prices for similar product groups”, according to the Dow theory applied to forex technical analysis, it is necessary to take into account currencies that evenly respond to the movement of external factors.

Attention!

Volume indicative of a trend. This means that the increase in volume indicates the current direction of price movement, i.e., the trend satisfies almost all market participants.

Forex technical analysis does not make it possible to fully track trading volumes, therefore it is recommended to use the open positions indicator.

The time of the trend movement is not limited. The trend continues until turn signals are received. This can be a price change for minimum and maximum indicators in the opposite direction of the trend movement.

Maximum and minimum

The maximum and minimum, when considering technical analysis, are the maximum and minimum indicators in a given period of time, which are used to find the starting point, or determine the installation points at a specified price.

They best show trend opportunities and top and bottom characteristics on a currency pair chart.

In order to determine the most significant indicator of the minimum and maximum, it is enough to analyze the charts of currency pairs and determine the highest and lowest trend indicators for a given period of time.

What are the minimum and maximum points for:

To carry out technical analysis in the foreign exchange market. You will be able to understand the values \u200b\u200bthat the price has reached in previous time periods, or for certain specified time periods. Thanks to this, you will be able to observe further price behavior and draw conclusions.
When looking for entry points, the space near the minimum and maximum is the most tempting place for new positions. IN in this case it is necessary to rely on the opposite value from the direction of the trend. These points are a reference point, crossing which the price will make a reversal.
Creation of channels. The low and high point is the foundation for creating price channels and lines of holding and resistance.

You can use these points for other purposes as well, but do not forget about the main rule - when the price overcomes the points of minimum and maximum that have been held for a long time, most often the price will not change and will continue to move.

Trend properties

Technical analysis for novice traders has been discussed and written more than once. You should be aware that in addition to direction and movement, a trend includes many other parameters and characteristics that are no less important than direction.

In order to determine the change and movement of prices, it is quite simple, and it takes some effort to conduct a technical analysis of the foreign exchange market and determine the accompanying parameters.

The trend estimation can be based on the scale and direction of the price channel, movement speed and points of minimum and maximum in a given time interval.

Downward and upward trend direction. To determine the required direction of the trend movement, you need to combine with a straight line a number of trend maximum and minimum points or create a price channel.
Price channel. Shows the price interval during which the trend moves. Thanks to this channel, you can find the most optimal points to enter the market or stop a deal at the right time. The parameters of the price channel are scale and frequency.
Speed. It also implies the strength of the trend. The higher the price movement speed, the more the price confirms its movement.
Volume and size of transactions. At present, the technical analysis of the foreign exchange market has made it possible to determine the number of transactions and the winning direction at the moment. If the volumes increase, this indicates confirmation of the current trend, and its decrease indicates an upcoming reversal.
High and low points. The maximum and minimum prices at a certain time interval, where trading is carried out.

Obviously, for a successful trade, in addition to determining the trend movement, you need to do a detailed analysis. It can be carried out as follows:

Decide on the direction.
The volume and size of buy transactions is increasing, which is a confirmation of the current trend.
The speed of movement is quite high when compared with other days.
Price placement is far from the high point on the time frame.
The price channel shows that a change has occurred at a given time and the price rises again.
Now we are confidently opening an acquisition deal.

In conclusion, we can add that technical analysis for novice traders is a certain method of analysis, which can be both manual and automated, acts as a system that applies past price changes to establish future price changes and the direction of trends.

Technical analysis for beginners in the manual system, is the analysis of indicators and determining the choice to buy or sell a currency trend.

Technical analysis for beginners automated system is an analysis of market indicators, that is, a trader tries to convey to the program which signals should be taken into account, and how to explain.

A big plus for automated analysis is the absence of a psychological factor that can harm a trader.

The main advantage of technical analysis is the charts and tools used by traders that can be used on any type of market system.

Therefore, technical analysis for novice traders is the best alternative for studying the movement and direction of prices and concluding profitable and successful deals.

Of course, it is impossible to understand all the concepts and movements. But systems are not considered particularly complex either.

Currently, in trading, most traders use technical analysis, making it more tempting. This is based on the fact that the price change directly comes from the same behavior of market participants.

That is, the number of satisfying scenarios and forecasts that will come true in the real market depends on how many more analysts use technical analysis in trading.

Remember, each trader has an individual approach to technical analysis, so there may be a situation where two different analysts, having analyzed the same time interval of price movement, come to conflicting conclusions regarding price movement in the future.

The most important thing here is to understand and study the main nuances of technical analysis, so as not to get confused in the future in the charts, levels and indicator signals.

Advice: before starting the activity of an analyst, it is recommended to learn not only this information, but also to analyze the most common ways of solving existing problems, as well as to study the possibilities of predicting indicators in the future.

Source: http://academyfx.ru/tekhnicheskij-analiz-foreks

The basis for trading success and efficiency

Forex technical analysis is the foundation of trading success and efficiency. It is one of the key points of any trading strategy.

Forex technical analysis studies the price movement in the past to predict the direction of price movement in the future.

Attention!

The main tool for studying Forex technical analysis is charts, on which we watch the movements of any currencies at any time interval. This is the main difference between a technical analyst and a fundamental one.

Forex fundamental analysis studies huge streams of economic statistics, news and comments from heads of central banks and so on. Is it enough for a technical analyst to just look at the chart and say what will happen next?

Regardless of the peculiarities of individual trading strategies, absolutely all traders can use the technical analysis of the Forex market with equal success.

In the Forex market, such moments periodically occur when it is relatively easy to predict where the price will go, but this cyclicality is replaced by a completely different cyclicality, in which it is not possible to predict its movement.

Fundamentals of technical analysis for beginners

It is important to emphasize that technical analysis for beginners is carried out on the past time frame, that is, what has already happened.

It also takes into account the level of demand for the currency for the previous currencies. Forex technical analysis involves studying the price trend line. It is she who gives an idea in which direction the price will move.

Agree, there is nothing super complicated in this? The secret of successful trading is unambiguously hidden in a high-quality technical analysis. Therefore, it is important for all novice traders to know its basics.

So, what are the fundamentals of Forex technical analysis? Consider simple technical analysis methods:

You can determine price movement using channels. These are, in a way, resistance and support lines, which are connected by lines along the main tops and bottoms at some time interval. Forex Channels show you where the trend will go. By the way, channel indicators build channels well, which saves traders a lot of time.
You need to trade exclusively along the trend - this is currently one of the most profitable ways to make a profit in the foreign exchange market. To determine the trend, it is important to use special Forex indicators. This is how defining a trend using lines looks like:

Having carried out a graphical analysis of Forex, without any difficulty, you can understand where the pair will go in the future.

This is often seen visually, however, due to the presence of various shapes, not only beginners, but even professionals sometimes cannot understand the resulting graphic model.

How to carry out TA using indicators?

Various Forex indicators almost always come to the aid of traders who conduct technical analysis of Forex. Let's consider one of the most famous - the Moving Average or Moving Average.

Moving averages MA, in turn, can be divided into 4 subspecies, these are:

MA simple (simple);
MA smoothed (smoothed);
MA exponential (exponential);
MA linear weighted (linearly weighted).

All these types of moving averages are available in the MT4 terminal. How can we use these averages to determine, say, a trend. Simple enough.

If the price is below the moving MA, then there is a downtrend in the market, if it is above it is an uptrend.

Below we have presented an example of a moving average on a Forex chart:

This is how a downtrend looks like, defined using a moving MA:

An example of an uptrend in the market can be seen below:

Main principles

Forex technical analysis can be carried out in different ways. The principles underlying technical analysis are based on the Dow theory.

It was once created specifically for the analysis of the currency and stock exchanges. Technical analysis is highly dependent on Dow Theory.

It has the following principles:

Everything that happens in the foreign exchange market and beyond is taken into account during the movement of the market. That is, the prices of pairs fluctuate from any news, as well as changes in supply and demand.

A price movement signals an event that has already occurred. All those who study the technical analysis of the Forex market understand this.

Considering Dow Theory, any trend can be broken down into 3 stages:

bullish (high series);
bearish (series of lows);
lateral (when the price is immovable).

The red horizontal lines are the channel that was formed by the lows and highs of the price.

Consider the options for trends:

downtrend (when the pair's downward movement prevails over the upward price movement);
upward trend (when the upward movement of the pair prevails over the downward movement of the price).

In addition, the trend can be divided into:

small (insignificant time interval not exceeding four months);
secondary (assessment duration from 2 weeks to 4 months);
primary trend (price fluctuations for the whole year are analyzed).

The dominant trend can be systematized in 3 stages:

how the market reacted to new changes, news and facts;
how the main market participants behaved after new events;
how the general market sentiment has changed.

If you believe the assertion that “for similar product groups the prices are the same”, then, starting from the Dow theory, it can be applied in the technical analysis of currencies, which react in approximately the same way to movement from external factors.

The presence of volume, without which the trend is impossible. The growing volume signals the real direction of the price, in other words, the direction of the trend suits almost all market participants.

By the way, Forex technical analysis does not allow traders to see the Forex volume levels. To do this, use the open positions indicator.

The movement of the trend in time may not be limited. The trend is observed until there are clear signals that promise a trend reversal.

What are the minimum and maximum points for?

When conducting technical analysis for novice traders, it is important to understand what the minimum and maximum price movement is. The minimum and maximum are the minimum and maximum points in the analyzed time interval.

With the help of them, the starting points or installation points are determined. With the help of them, it is possible to identify depressions and peaks, to carry out their characteristics.

To identify the most significant high and low prices, it is enough to look at a currency pair and it will immediately become clear where the price was worth the most, and where it was less in a given time period.

During the technical analysis on the foreign exchange market, the minimum and maximum points will provide an opportunity to comprehend the values \u200b\u200bthat the price has approached at certain intervals of time.

Then, by observing the price movement, it will help to draw conclusions on its further movement.

Attention!

Often, near highs and lows, you can consider opening entry points, as these are the most tempting places.

You need to consider the opposite value from the main price movement. This is a good benchmark, upon reaching which the price can reverse. You can create channels.

The point is that the high and low point is the foundation that helps to draw the resistance and support lines.

You see how many opportunities open up points of maximum and minimum. It is important not to forget the main rule: if the minimum and maximum points are continuously overcome, the market often passes their value, after which the price movement continues in the same direction.

Trend properties

Technical analysis for novice traders involves determining the direction and movement of the market. If we consider a trend separately, then it has many different characteristics and parameters.

The trend can be estimated based on the direction of the price channel, scale, high and low points, and movement speed.

To determine an uptrend or a downtrend, it is enough to connect two points of maximum and minimum. The resulting lines will indicate the current trend. In essence, this is creating a price channel.

The price channel is able to demonstrate the direction of the trend movement for a given time period. The Forex price channel provides an opportunity to find good entry points.

Frequency and scale should be distinguished from the parameters of the price channel. Movement speed indicates the strength of the trend. If the price moves at a high speed, this indicates an increase in the movement.

An equally important point of technical analysis is the size of transactions and the volume. If you conduct a high-quality technical analysis of Forex in the foreign exchange market, you can find out the direction of the trend, as well as determine the number of transactions required to make a profit.

It is also important to look at volumes. If they increase, it means that the current trend is only being confirmed. When it decreases, a trend reversal is outlined.

Points of minimum and maximum are no less important in technical analysis. The highest and the lowest price at a specific time interval makes it possible to understand a lot.

Detailed technical analysis chart

We determine the direction of the market (trend).
We look at the size of transactions and the volume, if they grow for a purchase, then the trend is upward, if they decline, wait for a reversal and a downtrend.
Spend comparative analysis speed of movement of the current day on the previous days.
Check if it is far away current price from the points of maximum and minimum at a certain time interval.
What the price channel shows (whether its price has broken through or not, etc.).
After that, you can open a buy or sell position, depending on the results of technical analysis.

We add that technical analysis of Forex must be done before trading. Today there is not only manual technical analysis, but also automated.

Forex technical analysis involves analyzing the past price movement to determine the future.

If we talk about manual technical analysis, then this is, first of all, the analysis of indicator readings and only then the decision of which order to open: buy or sell.

Technical analysis with the help of an automated system represents one or another indication of the market, while saving the trader's time and nerves.

Automated technical analysis also assumes the absence of any psychological factor, which determines whether a trader will enter the market correctly. Forex technical analysis is used absolutely on any type of market.

Analysts usually predict price based on data obtained from fundamental analysis. And those who analyze the market with the help of technical analysis are head and shoulders above those who use exclusively the “foundation”.

This is why it is so important to study Forex technical analysis. After all, knowing how to use it in the market, you can always predict the price movement, which will make it possible to open potentially profitable transactions.

There is nothing complicated in technical analysis, so you shouldn't postpone its study indefinitely.

Today, hundreds of thousands of traders, if not millions, are using Forex technical analysis in trading, making it more attractive.

That is, it turns out that the more traders analyze the market using technical analysis, the better the forecasts will come true in the real market.

Each trader has his own approach to technical analysis in the Forex market. So, it is quite possible that two analysts will come to conclusions differently about the future price movement.

If you thoroughly study the basics of technical analysis for beginners, as well as all the nuances, it will help you later not to get confused in indicator signals, levels and charts on different timeframes.

In conclusion, we would like to give the reader some useful advice: all those who want to analyze the market the way professional analysts see it, need to study technical analysis in detail, together with fundamental analysis, constantly solve problems that often arise on charts.

Attention!

If this is not done, it will be very difficult to forecast the market for the future, and even impossible. It is best when the future analyst starts learning technical analysis from scratch and gradually moves deeper.

Only then will the chances of reaching some heights and becoming a truly professional analyst maximize.

Current page: 1 (the book has 11 pages in total) [available passage for reading: 3 pages]

Technical analysis. Beginner course

The Russian edition of the book was prepared with the participation of the Moscow office of the company Reuters

Published with the assistance of JSC "Admiral Markets"

Editor A. Stetsenko

Scientific editors A. Ilyin, V. Ionov

Interpreter A. Polovnikova

Corrector D. Globa

Technical editor THEM. Dolgopolsky

Commissioning Editor A.V. Petrogradskaya

Layout designer A.O. Bohenek

* * *

To readers

Ladies and gentlemen!

We are pleased to present you our new project - the publication of a series of textbooks for students of Russian economic universities and beginners in the banking and financial sector.

Today, Reuters is the world's leading organization for the dissemination of news and financial information. In 2001 the company celebrated its 150th anniversary.

Reuters is unmatched in the amount, complexity and sheer volume of information supplied to banks, the media and an ever-growing number of other business subscribers.

We hope that our manuals will be of interest to you and that this will be the beginning of a fruitful cooperation with Reuters.

...

Respectfully,Ricardo Torres,general Director of Reuters AO

Acknowledgments

The publishers and Reuters Limited would like to acknowledge the invaluable support of this book:

Collin Nicholson of the Australian Technical Analysis Association for a thorough review of the book and constructive advice;

dr. Keith A. Rogers of Training and Learning Design, who wrote and designed the first version of this book;

Charles Kaplan, President of Equity Analitycs Ltd, for permission to use terms from his technical analysis vocabulary at the end of the book;

Haksu Kim of Pacific Investment Research, Inc. - for using his list of the world's financial markets given at the end of the book;

Ahsoka Markandu, Tracy Khu, Tai Liam Hwi, and Michael Turlington of Reuters Asia Pte Ltd for support and advice.

Also thanks to Dow Jones & Co. Inc. for providing a photograph of Charles Doe and the right to use it.

Preface to the Russian edition

Dear Readers!

The book you are holding in your hands is a systematic guide to the technical (graphical) analysis of stock prices. Exchange rates, dynamics of the value of shares, futures and other financial instruments - this is a wide field for the application of modern technical analysis. Close attention is paid to the practical use of the described methods and various technical indicators, therefore the book is rich in real examples, charts and explanations. If you want to learn something new, interesting, relevant about the international financial markets and comprehend the main facets of skill in interpreting and predicting the prices of financial assets, while being guided by all the possibilities of technical analysis for making highly profitable investment decisions, then, undoubtedly, this is the best book for you!

The main goal of Admiral Markets is to make trading in the financial markets as accessible as possible for everyone and everyone! In connection with the merger of Admiral Markets and UMIS, new instruments have become available for work - CFDs on shares of Russian companies, the RTS index, entry to the stock exchange of the Russian Federation and many others. It also became possible to open new accounts of the FX + system, absolutely all transactions on which are registered on the St. Petersburg Stock Exchange. At your service, among other things, there remains the possibility of trading in CFDs of shares of the largest US corporations listed on the New York Stock Exchange (NYSE) and the NASDAQ electronic exchange, as well as trading any of 45 currency pairs quoted by the company.

The modern, intuitive and multifunctional MetaTrader 4 trading terminal, which you can download for free on our company's website, will help you successfully master and test in practice the strategies and examples described in the book. A real or demo (demo) account is opened in 5 minutes online from anywhere in the world. There are still no minimum deposit requirements, and you can start trading from $ 10-50. We accept bank transfers, credit card payments, e-currencies.

In 2007, a unique bonus program Admiral Club ™ was developed, to which thousands of our clients have become members. Every year the company also organizes international trading contests with substantial prize pools for everyone. By trading on demo accounts with virtual money, you can earn real cash prizes!

Information for inquiries and company contacts

Admiral Markets corporate website: http://www.forextrade.ru

UMIS corporate website: http://www.umis.ru

Phones of the unified reference service:

8-800-555-75-08 (within Russia - free of charge),

8-495-775-75-08 (Moscow).

Head office address in Russia:

123317, Moscow, Presnenskaya nab., 10,

block C, tower on the embankment, office. 568.

Email post office: [email protected]

Before you start ...

Who is this book written for?

You will also be able to apply the knowledge gained to study or work in the specialty "technical analysis" at the ACI.

What will you find in this book?

How is this book compiled?

This book includes the following sections:

Before you start ...

Current section.

Introduction

Summarizes the history of technical analysis and Dow theory.

Types of graphs

This section describes the basic methods of presenting prices and financial data on charts and lists the features of the application of each type of charts.

Classic chart analysis

Sell \u200b\u200bor Buy? Plotting can often identify patterns that aid decision making.

Indicators

Is it possible to predict the market trend? This section describes the different types of indicators.

Waves, numbers and cycles

Are markets really cyclical and can be described by wave patterns? Are markets governed by mathematical laws or are they chaotic?

A day in the life of a technical analyst

What it looks like in reality.

This icon indicates a definition of a term that is important to understanding the material.

This icon seems to say: "Stop and think." You can also write your thoughts in the empty box that you leave.

This icon indicates an assignment, usually written, such as a definition, notes, or calculations.

This icon marks the answers, which are usually given immediately after the tasks.

This icon highlights the main points of the section.

This icon marks questions that will help you get an overview of the material. The answers are also attached.

This is a one-page overview icon that allows you to quickly repeat a section. This page is great learning material.

A list of additional sources is provided at the end of each section.

How to use this book

Before you start working with this book, determine exactly what you want to get out of it. If you will use the knowledge gained in your work, enlist the support of the management and discuss with them the possibility of making time for your studies. Although the learning style is different for each person, the best results can be achieved if you practice for about 30 minutes every day. If you try to read a book between activities, neither your time nor your study material will be used properly. You should plan your studies in the same way as business meetings.

Remember that the most effective teaching is interactive, that is, not only reading text. The exercises in this book will help you think through the material and apply what you have learned, so be sure to do the exercises. As the old Chinese proverb says:

I hear and forget
I see and remember
I do and understand.

Try to avoid interruptions in your studies. Chances are, your workplace isn't particularly suitable for learning; it is better to study in a quiet place - at home or in the library, and it will take time.

Keep in mind, however, that learning is not a competition and everyone learns at an individual rate. For some, the tasks will seem easy, for others - difficult. Take your time and try to get as much of the book as possible.

This is your study, so it's up to you to decide.

Chapter 1. Introduction

...

Doe was an accomplished newspaper reporter who learned from the great Samuel Bowles - newspaper editor Springfield republican ... He was a true New England native - ultra-conservative, reserved, intelligent, and knowledgeable. I worked with him in the last years of his life and, despite all the respect I had for him, like many of his friends, I sometimes flew into a rage at his conservatism ... As boxers say, he always hit with a delay.
How Good is the Dow Theory? Part 1 by Bill Dunbar Technical Analysis of Stocks and Commodities, Vol. 3: 2 (59–63), 1985

What is Market Analysis?

Since the beginning of trading stocks and commodities such as rice, traders and investors have noted trends (trends) and patterns in price behavior over time. Modern markets have spawned many sayings, for example:

...

"Trend is your friend" or

Follow the trend.

But what do they really mean? And what are charts used for, such as the Dow Jones Industrial Average, in financial publications like Financial Times, The Wall Street Journal and electronic data systems?

You may have asked the following questions:

Where did these sayings come from?

How fair and useful are they?

Who uses these graphs?

What do they show?

Most investors, traders, brokers, dealers and other market participants, whether private or working for an organization, try to get maximum income from their investments and profit from transactions. They will be happy about any method that would help reduce the risk of losing money and increase the chances of winning. But is it possible to determine at what point it is profitable to sell and at what point to buy stocks, futures contracts, etc.?

Market participants use charts and analytical tools to determine changes in the supply and demand for securities. It helps predict prices and formulate trading strategies for all financial markets. Some of the most common graphs display:

Stock markets in general (market indices);

Equity market sectors (sector indices);

Individual promotions;

Currency rates;

Interest rates (bonds, bills, treasury notes, etc.);

Goods (agricultural products, metals, energy sources, textile raw materials);

Futures;

Options.

There are two main types of market analysis, each of which is performed by specific specialists. It:

fundamental analysis;

technical analysis (chart analysis).

In practice, most investors use both types of analysis tools and methods.

Fundamental analysis

Fundamental analysis can be defined as follows:

...

Fundamental analysis is a method of predicting future movements in stock prices based on economic, political and other significant factors and indicators that will affect the supply and demand of securities.

Fundamental analysis identifies and measures factors that affect the intrinsic value of a security, such as the general economic and political environment, including factors that affect the supply and demand of securities-related goods and services. If demand increases but supply does not change, market prices will rise. If the supply increases, it will have the opposite effect.

For example, a researcher for a listed company examines supply and demand for a company's products or services; quality of management; its past and projected activities; plans for the future of the company and its competitors; industry-wide statistics; the general state of the economy and government policy. A commodity analyst examines prices, supply, demand and available stocks; consumption forecasts; production or production plans; condition and weather forecasts; availability of substitutes; economic and political situation.

Based on this data, the analyst builds a model to determine the current and projected value of the securities. An uncompensated increase in supply usually leads to a decrease in price, and an uncompensated increase in demand leads to an increase in price. The analyst estimates the intrinsic value, compares it to the current price, and decides whether prices will go up or down. The idea is that if the stock price is below intrinsic value, then you should expect it to rise. If the price is higher than the intrinsic value, a fall should be expected.

The difficulty of fundamental analysis is in accurately assessing the relationship between indicators, while the analyst must be based on his own experience. Moreover, the market tends to “anticipate” events and adjust prices in advance. Another objective property of the market (which can be both useful and harmful - depending on time) is that it takes time for it to react to the difference in price and intrinsic value.

Technical analysis

Technical analysis can be defined as follows:

...

Technical analysis is a method of predicting price changes and future market trends by studying the charts of historical changes in the market, taking into account the prices of securities, the volume of transactions and, if possible, the volume of open positions.

Technical analysis examines what has already happened in the market, not what is about to happen. A technical analyst studies the movement of prices and volumes of transactions in securities and, based on these data, draws charts based on the actions of market participants. These charts are his main tool. A technical analyst is not interested in global factors affecting the market, but concentrates on the activity of the market for these securities.

Consequently, technical analysis is also a subjective “art” or skill that is highly dependent on the analyst's experience. Even experienced analysts sometimes cannot clearly interpret the chart. Two analysts can define the time frame in different ways: one will mark the likelihood of an imminent rise in prices, and the other will interpret what is happening as just a small rise in a long-term downtrend. Why, then, is technical analysis so important to the markets?

Principles underlying technical analysis

Technical analysis is based on three principles:

1. Market movement takes into account everything

This means that the current price is a reflection of all the data known to the market that can affect this market. These include supply and demand, political factors and market bias. The technical analyst only considers price movements, not the reasons for these movements

2. Models do exist

Technical analysis is used to recognize specific patterns of market behavior. For many of these models, there is a high probability of a certain outcome. In addition, famous patterns are repeated on a regular basis.

3. History repeats itself

Patterns have been identified and classified for over 100 years. The frequency with which they are repeated leads to the conclusion that human psychology does not change significantly over time.

If all of the above principles were absolutely valid, technical analysis would not be an art, but a science. But in reality, history does not always repeat itself, and patterns do not always emerge in the same way as before. Therefore, technical analysis is a set of subjective skills, and the interpretation of charts that predict market behavior depends on the skills of the individual analyst. The future cannot be reliably predicted on the basis of the past. Technical analysis considers the likelihood that a given result will be achieved in a given situation - and in some cases this probability is very high.

Calculation of overhead costs Overhead costs, their composition and characteristics

Fundamentals of civil service and personnel policy

Thesis: Transformation of soils and landscapes of the Kerch Peninsula at the present stage of environmental management

Prospects for the development of the insurance market in Russia

Assessment of the investment attractiveness of an enterprise: methods for evaluating a company

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