Technical Analysis (TA) can make investors rich

Introduction:

Don’t depend only on rumors, learn first. You may lose capital if you run with rumors. Share business is not for uneducated persons. It’s one kind of business. So, you have to learn many things before investing. There are many terms, like NAV, P/E, EPS etc. You have to know Fundamental Analysis (FA) and Technical Analysis (TA) both as a successful investor.

What is Technical Analysis?

Now I am telling what Technical Analysis (TA) is. TA is a method to analyze stock and make investment decisions accurately based on its past history. TA works mainly on Price and Volume. Actually TA works 80% on price and 20% on volume. TA does not result in absolute predictions about the future. Instead, Chart analysis can help investors anticipate what is "probable" to happen to prices over time.

In the above chart, Bollinger band (red line) is showing price volatility of stocks. Green line represents 10 days moving average. In the lower portion of this chart is volume bar. Red bar indicates bearish (downtrend) and Green bar indicates bullish (uptrend). 

There are few basic TA indicators, such as RSI (Relative Strength Index), MACD (Moving Average Convergence-Divergence), MFI (Money Flow Index), Stochastic, William %R, ADX (Average Directional Index) etc. Moving Average is very useful in Technical Analysis. You can use some popular moving average for trading, like 3, 9, 13; 10, 20, 50, 200 days Moving Average (MA). TA can give you an idea about overbought (Technical person will sell) or oversold (Technical person will buy) situation of your stocks also. TA can define Support-Resistance level of any stocks which represent key junctures where the forces of supply and demand meet. Stock price is related to supply and demand also. TA uses a wide variety of charts that show price over time. You also have to understand some popular and widely used chart patterns.

Few good indicators

Trading with Charts:

AmiBroker is one of the best Technical Analysis software. You can import market data into AmiBroker as CSV/excel format for analysis. There are many AFLs available which can provide buy/sell signal and can be used in AmiBroker. TA may give many fake signals, you have to understand which one is fake or real signal by using different indicators. 

Conclusions:

In summary, TA can help you to understand the market trend (bull or bullish); it can also help to get buy/sell decision, i.e. right decision in right time. So, learn Fundamental & Technical Analysis for Minimize Loss & Maximize Profit.

Read more:    http://michaljohnblog.blogspot.com

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Buying High, Selling Low Why Acting on Price can be a Mistake

Buy low and sell high is the ultimate guide to successful stock investing. It is also the reverse of what many investors do.

It’s not that investors start out to do that, but too often, they use price, and in particular price movement, as their only signal to buy or sell.

Stocks that have gone up recently, especially those with a lot of press, often attract even more buyers. This obviously drives the price up even higher.

People get excited about what they read and see and want a part of the action. They jump into a stock that is already trading at a premium – they buy high.

Traders

Experienced traders can make money jumping in and out of a stock that’s caught the public’s attention, but it’s not a game for the inexperienced and it’s not investing.

There’s risk involved and tax consequences along with other issues that mean most investors should leave this activity to short-term traders.

For most investors, trying to grab a piece of the latest flashy stock, usually means paying too much (buying high).

Bad Decision

The other side of the market is when a stock has fallen; most investors may want to sell along with the rest of the market. If you go by price alone, this can be a bad decision (sell low).

There are many reasons a stock’s price drops and some of them have nothing to do with the soundness of the investment. That’s why if you only follow price you may miss an opportunity.

After a stock’s price has fallen can be a great time to buy (buy low) if you have done your research on the company.

Conclusion

If all you know about a stock is the price, you may (and likely will) make investing mistakes. Remember, if a stock has had a good run up it may be time to sell, not buy (sell high). Similarly, if a stock has dropped like a rock, it may be a good time to buy rather than sell (buy low). You won’t know what to do unless you understand a lot more about the company than its stock price.

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Mobil Jamuna- Distribution Schedule of Refund Warrant

Mobil Jamuna Bangladesh Limited (MJL)

Distribution Schedule of Refund Warrant (only allotted shareholders)

Source: Daily Star, date: 15 June, 2011

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Bollinger Bands

Introduction:

Bollinger Bands are a Technical Trading tool created by John Bollinger in the early 1980s. Bollinger bands are probably one of the most important indicators ever developed for measuring price action volatility. You can use to achieve near perfect entry and exit consistently. There are a few variations on how to use Bollinger bands depending on market conditions.

You can use Bollinger bands as a very accurate indicator within any time frame.

Bollinger Bands Basic:

Bollinger Bands are a way to display volatility and relative overbought and oversold price levels over a specific period. The three parts are commonly labeled as a Center line, Upper band and Lower band. The center line is usually a simple moving average, while the upper and lower bands are simply the centerline with a standard deviation added or subtracted.

The standard settings for the Bollinger Band are a 20-day simple moving average for the center, with a 2 standard deviation set for the outer bands. There is no best setting, but when developed the (20, 2) setting were used by John Bollinger, and will work for most stock charts.

How to trade with Bollinger band

The candlesticks present represent current approaching price action to the upper band or lower band. Lets start with number 1 to number 8, one by one.

1. Extremely bearish, price is falling to a lower band and the KEY is of course watching both the upper and lower band as price approaches. In this case the upper is rising while the lower is falling indicating not only a potential explosion in price but one to the downside is extremely likely.
2. Extremely bullish, price is rising to the upper band and the KEY is keeping a watchful eye on BOTH band as price approaches. In this case the upper band heads UP and the lower band falls, indicating a potential price explosion to the upside.
3. Price approaches the lower band while the upper and lower band remain flat. This is very insignificant and should be ignored unless things change.
4. Price approaches the upper band while the upper and lower bands remain flat. This is also insignificant and best left for the amateurs to enter.
5. Bearish candlestick at a lower band while band constrict - this is a sign that price is likely at least for now going nowhere. Wait do not enter.
6. Same here, a bullish candlestick at the upper band while the bands are constricting is a sign that not much is about to happen just yet.
7. Like number 1 this is a sign that price is going to make a nice move but the lack of the upper band hooking up indicates that the move for now won't necessarily be explosive.
8. Also similar to its counterpart in that price will likely move but not to the explosive level that would be expedited if the lower band was hooking downward.  The lack of the lower band hooking down limits the potential move here.

Conclusions

Bollinger Bands reflect direction with the 20-period SMA and volatility with the upper/lower bands. As such, they can be used to determine if prices are relatively high or low. According to Bollinger, the bands should contain 85-90% of price action, which makes a move outside the bands significant. Technically, prices are relatively high when above the upper band and relatively low when below the lower band. However, relatively high should not be regarded as bearish or as a sell signal. Likewise, relatively low should not be considered bullish or as a buy signal. Prices are high or low for a reason. As with other indicators, Bollinger Bands are not meant to be used as a stand alone tool. Chartists should combine Bollinger Bands with basic trend analysis and other indicators for confirmation. So, Bollinger bands is a very accurate indicator within any time frame.

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Make profit by using Moving Averages

A moving average line is just the average price of a stock over the period of time. The Two Moving Averages Use two moving averages: the 10-SMA and the 30-EMA. I like to use a slower one and a faster one. Do you know Why? Because when the faster one (10) crosses over the slower one (30), it will often signal a trend change. Let's look at an example: Delta Spinning chart of moving averages:

Chart of Delta Spinning

You can see in the chart above how these lines can help you define trends. On the left side of the chart the 10 SMA is above the 30 EMA and the trend is up. The 10 SMA crosses down below the 30 EMA in mid August and the trend is down. Then, the 10 SMA crosses back up through the 30 EMA in September and the trend is up again - and it stays up for several months thereafter.  

Here are the rules: Focus on long positions only when the 10 SMA is above the 30 EMA. Focus on short positions only when the 10 SMA is below the 30 EMA. It doesn't get any simpler than that and it will ALWAYS keep you on the right side of the trend! Note that moving averages only work well when a stock is trending - not when they are in a trading range. When a stock (or the market itself) becomes "sloppy" then you can ignore moving averages - they won't work! Here are the important things to remember (for long positions - reverse for short positions.):

1. The 10 SMA must be above the 30 EMA.
2. There must be plenty of space in between the moving averages.
3. Both moving averages must be sloping upward.

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