Technical Analysis - Advanced Technical Analysis - Technical Analysis Education Resources for Stock, Futures, Forex Trading

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Technical Analysis

Wednesday, 07 January 2009

Technical Analysis

Chart Formations

It is important to note that the Technical Analysis Overview provided does not attempt to be a comprehensive treatment of Charting or Technical Analysis methods. There are numerous, well-written books on Chart Interpretation and Technical Analysis. A brief and simplistic review of some basic charting concepts are provided for reference or to stimulate further study. Please contact your broker for a recommended reading list on Charting and Technical Analysis.

Simply buying a stock just because it has great fundamentals and a high Amateur Investor Index (AII) ranking doesn't mean you should buy the stock blindly. In order to be successful at internet stock trading you must take in account additional factors. These include looking at Chart Patterns, Market Indicators, Moving Averages and using Good Money Management Skills.
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Investing 101 Lesson #2: Chart patterns (Sell Signals)

When to sell a stock is a more difficult decision than buying a stock in my opinion. If you sell too early then you may miss a significant move upward and if you hold a stock too long, then it may drop all the way back down to what you purchased it for or even below that. Stocks have a tendency to drop more quickly than they rise. For example it may take several weeks for a stock to go from $50 to $100 but it may only take a few weeks or even less for it to drop from $100 back to $50. So as an investor you should pay close attention to what the charts look like when you decide to buy or sell a stock. Some chart patterns that warn me of a potential reversal include a Climax Top off a Parabolic Move, Double Top and the Head and Shoulders Top.