Technical Analysis Workshop Reference Guide How to Keep the Use This Guide Conversation Going

Total Page:16

File Type:pdf, Size:1020Kb

Technical Analysis Workshop Reference Guide How to Keep the Use This Guide Conversation Going Technical Analysis Workshop Reference Guide How to Keep the use this guide conversation going This reference guide is a tool to assist you in your learning Make sure to follow TD Ameritrade on these social during and after the Technical Analysis workshop. channels to stay connected with industry-thought leaders and fellow investors. During the Workshop • Follow along with the presenter—the slides facebook.com/tdameritrade are in the guide. youtube.com/user/TDAmeritrade After the Workshop • Continue using the guide as a reference of @TDAmeritrade all you’ve learned. How to use this guide 2 Important Information While this workshop discusses technical analysis, other approaches, including fundamental analysis, may assert very different views. Educational Purposes: The following presentation is for educational purposes only and is not a recommendation or endorsement of any particular investment or investment strategy. Past performance does not indicate or guarantee future success. Discussion of returns are hypothetical and may not include the impact of commissions and fees. Returns will vary and all investments involve risks, including loss of principal. paperMoney® Trading: The paperMoney® software application is for educational purposes only. Successful virtual trading during one time period does not guarantee successful investing of actual funds during a later time period—market conditions change constantly. Investing Strategies: All investing strategies discussed are provided for informational purposes only and should not be considered a recommen- dation of any security, strategy, or specific portfolio allocation. Investing strategies and rules are provided for attendees to better understand how they may build a strategy that best fits their own personal investing style. Investing Risks: The risk of loss from investing in securities, options, bonds, futures, and forex can be substantial. Investors must consider all rele- vant risk factors, including their own personal financial situation, before investing. No soliciting. No photography. No part of this presentation may be copied, recorded, or rebroadcast in any form without the prior written consent of TD Ameritrade, Inc. Supporting documentation for any claims, comparison, statistics, or other technical data will be supplied upon request. TD Ameritrade, Inc., member FINRA/SIPC. TD Ameritrade is a trademark jointly owned by TD Ameritrade IP Company, Inc. and The Toronto-Dominion Bank. © 2020 TD Ameritrade. In order to demonstrate the functionality of the platform, we need to use actual symbols. However, TD Ameritrade does not make recommendations or determine the suitability of any security or strategy for individual traders. Any investment decision you make in your self- directed account is solely your responsibility Important Information 3 Important Information Carefully consider the investment objectives, risks, charges, and expenses of any mutual fund or exchange-traded fund (ETF) before investing. To obtain a prospectus containing this and other important information, contact your broker. Please read the prospectus carefully before investing. The examples that follow do not include transaction costs. Transaction costs (commissions and other fees) are important factors and should be considered when evaluating any options trade. $0 commission applies to online U.S. exchange-listed stocks, ETFs, and options trades. $0.65 per options contract fee applies to options trades. Important Information 4 Technical Analysis Workshop 5 Technical Analysis Workshop 6 Technical Analysis Workshop 7 Technical Analysis Workshop 8 Technical Analysis Workshop 9 Technical Analysis Workshop 10 Technical Analysis Workshop 11 Technical Analysis Workshop 12 Technical Analysis Workshop 13 Technical Analysis Workshop 14 Technical Analysis Workshop 15 Technical Analysis Workshop 16 Technical Analysis Workshop 17 Technical Analysis Workshop 18 Technical Analysis Workshop 19 Technical Analysis Workshop 20 Technical Analysis Workshop 21 Technical Analysis Workshop 22 Technical Analysis Workshop 23 Technical Analysis Workshop 24 Technical Analysis Workshop 25 Technical Analysis Workshop 26 Technical Analysis Workshop 27 Technical Analysis Workshop 28 Technical Analysis Workshop 29 Technical Analysis Workshop 30 Technical Analysis Workshop 31 Technical Analysis Workshop 32 Technical Analysis Workshop 33 Technical Analysis Workshop 34 Technical Analysis Workshop 35 Technical Analysis Workshop 36 Technical Analysis Workshop 37 Technical Analysis Workshop 38 Technical Analysis Workshop 39 Technical Analysis Workshop 40 Technical Analysis Workshop 41 Technical Analysis Workshop 42 Technical Analysis Workshop 43 Technical Analysis Workshop 44 Technical Analysis Workshop 45 Technical Analysis Workshop 46 Technical Analysis Workshop 47 Technical Analysis Workshop 48 Technical Analysis Workshop 49 Technical Analysis Workshop 50 Technical Analysis Workshop 51 Technical Analysis Workshop 52 Technical Analysis Workshop 53 Technical Analysis Workshop 54 Technical Analysis Workshop 55 Technical Analysis Workshop 56 Technical Analysis Workshop 57 Technical Analysis Workshop 58 Technical Analysis Workshop 59 Technical Analysis Workshop 60 Technical Analysis Workshop 61 Technical Analysis Workshop 62 Technical Analysis Workshop 63 Technical Analysis Workshop 64.
Recommended publications
  • Putting Volatility to Work
    Wh o ’ s afraid of volatility? Not anyone who wants a true edge in his or her trad i n g , th a t ’ s for sure. Get a handle on the essential concepts and learn how to improve your trading with pr actical volatility analysis and trading techniques. 2 www.activetradermag.com • April 2001 • ACTIVE TRADER TRADING Strategies BY RAVI KANT JAIN olatility is both the boon and bane of all traders — The result corresponds closely to the percentage price you can’t live with it and you can’t really trade change of the stock. without it. Most of us have an idea of what volatility is. We usually 2. Calculate the average day-to-day changes over a certain thinkV of “choppy” markets and wide price swings when the period. Add together all the changes for a given period (n) and topic of volatility arises. These basic concepts are accurate, but calculate an average for them (Rm): they also lack nuance. Volatility is simply a measure of the degree of price move- Rt ment in a stock, futures contract or any other market. What’s n necessary for traders is to be able to bridge the gap between the Rm = simple concepts mentioned above and the sometimes confus- n ing mathematics often used to define and describe volatility. 3. Find out how far prices vary from the average calculated But by understanding certain volatility measures, any trad- in Step 2. The historical volatility (HV) is the “average vari- er — options or otherwise — can learn to make practical use of ance” from the mean (the “standard deviation”), and is esti- volatility analysis and volatility-based strategies.
    [Show full text]
  • Testing the Profitability of Technical Analysis in Singapore And
    View metadata, citation and similar papers at core.ac.uk brought to you by CORE provided by ScholarBank@NUS Testing the Profitability of Technical Analysis in Singapore and Malaysian Stock Markets Department of Electrical and Computer Engineering Zoheb Jamal HT080461R In partial fulfillment of the requirements for the Degree of Master of Engineering National University of Singapore 2010 1 Abstract Technical Analysis is a graphical method of looking at the history of price of a stock to deduce the probable future trend in its return. Being primarily visual, this technique of analysis is difficult to quantify as there are numerous definitions mentioned in the literature. Choosing one over the other might lead to data- snooping bias. This thesis attempts to create a universe of technical rules, which are then tested on historical data of Straits Times Index and Kuala Lumpur Composite Index. The technical indicators tested are Filter Rules, Moving Averages, Channel Breakouts, Support and Resistance and Momentum Strategies in Price. The technical chart patterns tested are Head and Shoulders, Inverse Head and Shoulders, Broadening Tops and Bottoms, Triangle Tops and Bottoms, Rectangle Tops and Bottoms, Double Tops and Bottoms. This thesis also outlines a pattern recognition algorithm based on local polynomial regression to identify technical chart patterns that is an improvement over the kernel regression approach developed by Lo, Mamaysky and Wang [4]. 2 Acknowledgements I would like to thank my supervisor Dr Shuzhi Sam Ge whose invaluable advice and support made this research possible. His mentoring and encouragement motivated me to attempt a project in Financial Engineering, even though I did not have a background in Finance.
    [Show full text]
  • Technical and Fundamental Analysis
    University of Tennessee, Knoxville TRACE: Tennessee Research and Creative Exchange Supervised Undergraduate Student Research Chancellor’s Honors Program Projects and Creative Work 12-2016 Understanding the Retail Investor: Technical and Fundamental Analysis Ben Davis [email protected] Follow this and additional works at: https://trace.tennessee.edu/utk_chanhonoproj Part of the Finance and Financial Management Commons Recommended Citation Davis, Ben, "Understanding the Retail Investor: Technical and Fundamental Analysis" (2016). Chancellor’s Honors Program Projects. https://trace.tennessee.edu/utk_chanhonoproj/2024 This Dissertation/Thesis is brought to you for free and open access by the Supervised Undergraduate Student Research and Creative Work at TRACE: Tennessee Research and Creative Exchange. It has been accepted for inclusion in Chancellor’s Honors Program Projects by an authorized administrator of TRACE: Tennessee Research and Creative Exchange. For more information, please contact [email protected]. University of Tennessee Global Leadership Scholars & Chancellors Honors Program Undergraduate Thesis Understanding the Retail Investor: Technical and Fundamental Analysis Benjamin Craig Davis Advisor: Dr. Daniel Flint April 22, 2016 1 Understanding the Retail Investor: Fundamental and Technical Analysis Abstract: If there is one thing that people take more seriously than their health, it is money. Behavior and emotion influence how retail investors make decisions on the methodology of investing/trading their money. The purpose of this study is to better understand what influences retail investors to choose the method by which they invest in capital markets. By better understanding what influences retail investors to choose a certain investment methodology, eventually researchers can provide tailored and normative advice to investors as well as the financial planning industry in effectively and efficiently working with clients.
    [Show full text]
  • Relative Strength Index for Developing Effective Trading Strategies in Constructing Optimal Portfolio
    International Journal of Applied Engineering Research ISSN 0973-4562 Volume 12, Number 19 (2017) pp. 8926-8936 © Research India Publications. http://www.ripublication.com Relative Strength Index for Developing Effective Trading Strategies in Constructing Optimal Portfolio Dr. Bhargavi. R Associate Professor, School of Computer Science and Software Engineering, VIT University, Chennai, Vandaloor Kelambakkam Road, Chennai, Tamilnadu, India. Orcid Id: 0000-0001-8319-6851 Dr. Srinivas Gumparthi Professor, SSN School of Management, Old Mahabalipuram Road, Kalavakkam, Chennai, Tamilnadu, India. Orcid Id: 0000-0003-0428-2765 Anith.R Student, SSN School of Management, Old Mahabalipuram Road, Kalavakkam, Chennai, Tamilnadu, India. Abstract Keywords: RSI, Trading, Strategies innovation policy, innovative capacity, innovation strategy, competitive Today’s investors’ dilemma is choosing the right stock for advantage, road transport enterprise, benchmarking. investment at right time. There are many technical analysis tools which help choose investors pick the right stock, of which RSI is one of the tools in understand whether stocks are INTRODUCTION overpriced or under priced. Despite its popularity and powerfulness, RSI has been very rarely used by Indian Relative Strength Index investors. One of the important reasons for it is lack of Investment in stock market is common scenario for making knowledge regarding how to use it. So, it is essential to show, capital gains. One of the major concerns of today’s investors how RSI can be used effectively to select shares and hence is regarding choosing the right securities for investment, construct portfolio. Also, it is essential to check the because selection of inappropriate securities may lead to effectiveness and validity of RSI in the context of Indian stock losses being suffered by the investor.
    [Show full text]
  • Lecture 20: Technical Analysis Steven Skiena
    Lecture 20: Technical Analysis Steven Skiena Department of Computer Science State University of New York Stony Brook, NY 11794–4400 http://www.cs.sunysb.edu/∼skiena The Efficient Market Hypothesis The Efficient Market Hypothesis states that the price of a financial asset reflects all available public information available, and responds only to unexpected news. If so, prices are optimal estimates of investment value at all times. If so, it is impossible for investors to predict whether the price will move up or down. There are a variety of slightly different formulations of the Efficient Market Hypothesis (EMH). For example, suppose that prices are predictable but the function is too hard to compute efficiently. Implications of the Efficient Market Hypothesis EMH implies it is pointless to try to identify the best stock, but instead focus our efforts in constructing the highest return portfolio for our desired level of risk. EMH implies that technical analysis is meaningless, because past price movements are all public information. EMH’s distinction between public and non-public informa- tion explains why insider trading should be both profitable and illegal. Like any simple model of a complex phenomena, the EMH does not completely explain the behavior of stock prices. However, that it remains debated (although not completely believed) means it is worth our respect. Technical Analysis The term “technical analysis” covers a class of investment strategies analyzing patterns of past behavior for future predictions. Technical analysis of stock prices is based on the following assumptions (Edwards and Magee): • Market value is determined purely by supply and demand • Stock prices tend to move in trends that persist for long periods of time.
    [Show full text]
  • Technical Analysis, Liquidity, and Price Discovery∗
    Technical Analysis, Liquidity, and Price Discovery∗ Felix Fritzy Christof Weinhardtz Karlsruhe Institute of Technology Karlsruhe Institute of Technology This version: 27.08.2016 Abstract Academic literature suggests that Technical Analysis (TA) plays a role in the decision making process of some investors. If TA traders act as uninformed noise traders and generate a relevant amount of trading volume, market quality could be affected. We analyze moving average (MA) trading signals as well as support and resistance levels with respect to market quality and price efficiency. For German large-cap stocks we find excess liquidity demand around MA signals and high limit order supply on support and resistance levels. Depending on signal type, spreads increase or remain unaffected which contra- dicts the mitigating effect of uninformed TA trading on adverse selection risks. The analysis of transitory and permanent price components demonstrates increasing pricing errors around TA signals, while for MA permanent price changes tend to increase of a larger magnitude. This suggests that liquidity demand in direction of the signal leads to persistent price deviations. JEL Classification: G12, G14 Keywords: Technical Analysis, Market Microstructure, Noise Trading, Liquidity ∗Financial support from Boerse Stuttgart is gratefully acknowledged. The Stuttgart Stock Exchange (Boerse Stuttgart) kindly provided us with databases. The views expressed here are those of the authors and do not necessarily represent the views of the Boerse Stuttgart Group. yE-mail: [email protected]; Karlsruhe Institute of Technology, Research Group Financial Market Innovation, Englerstrasse 14, 76131 Karlsruhe, Germany. zE-mail: [email protected]; Karlsruhe Institute of Technology, Institute of Information System & Marketing, Englerstrasse 14, 76131 Karlsruhe, Germany.
    [Show full text]
  • Technical-Analysis-Bloomberg.Pdf
    TECHNICAL ANALYSIS Handbook 2003 Bloomberg L.P. All rights reserved. 1 There are two principles of analysis used to forecast price movements in the financial markets -- fundamental analysis and technical analysis. Fundamental analysis, depending on the market being analyzed, can deal with economic factors that focus mainly on supply and demand (commodities) or valuing a company based upon its financial strength (equities). Fundamental analysis helps to determine what to buy or sell. Technical analysis is solely the study of market, or price action through the use of graphs and charts. Technical analysis helps to determine when to buy and sell. Technical analysis has been used for thousands of years and can be applied to any market, an advantage over fundamental analysis. Most advocates of technical analysis, also called technicians, believe it is very likely for an investor to overlook some piece of fundamental information that could substantially affect the market. This fact, the technician believes, discourages the sole use of fundamental analysis. Technicians believe that the study of market action will tell all; that each and every fundamental aspect will be revealed through market action. Market action includes three principal sources of information available to the technician -- price, volume, and open interest. Technical analysis is based upon three main premises; 1) Market action discounts everything; 2) Prices move in trends; and 3) History repeats itself. This manual was designed to help introduce the technical indicators that are available on The Bloomberg Professional Service. Each technical indicator is presented using the suggested settings developed by the creator, but can be altered to reflect the users’ preference.
    [Show full text]
  • Technical Analysis: Technical Indicators
    Chapter 2.3 Technical Analysis: Technical Indicators 0 TECHNICAL ANALYSIS: TECHNICAL INDICATORS Charts always have a story to tell. However, from time to time those charts may be speaking a language you do not understand and you may need some help from an interpreter. Technical indicators are the interpreters of the Forex market. They look at price information and translate it into simple, easy-to-read signals that can help you determine when to buy and when to sell a currency pair. Technical indicators are based on mathematical equations that produce a value that is then plotted on your chart. For example, a moving average calculates the average price of a currency pair in the past and plots a point on your chart. As your currency chart moves forward, the moving average plots new points based on the updated price information it has. Ultimately, the moving average gives you a smooth indication of which direction the currency pair is moving. 1 2 Each technical indicator provides unique information. You will find you will naturally gravitate toward specific technical indicators based on your TRENDING INDICATORS trading personality, but it is important to become familiar with all of the Trending indicators, as their name suggests, identify and follow the trend technical indicators at your disposal. of a currency pair. Forex traders make most of their money when currency pairs are trending. It is therefore crucial for you to be able to determine You should also be aware of the one weakness associated with technical when a currency pair is trending and when it is consolidating.
    [Show full text]
  • The Boundaries of Technical Analysis Milton W
    The Boundaries of Technical Analysis Milton W. Berg, CFA 1 Market Prognostication In his treatise on stock market patterns, the late Professor Harry V. Roberts1 observed that “of all economic time series, the history of stock prices, both individual and aggregate, has probably been most widely and intensively studied,” and “patterns of technical analysis may be little if nothing more than a statistical artifact.”2 Ibbotson and Sinquefield maintain that historical stock price data cannot be used to predict daily, weekly or monthly percent changes in the market averages. However, they do claim the ability to predict in advance the probability that the market will move between +X% and -Y% over a specific period.3 Only to this very limited extent – forecasting the probabilities of return – can historical stock price movements be considered indicative of future price movements. In Chart 1, we present a histogram of the five-day rate of change (ROC) in the S&P 500 since 1928. The five-day ROC of stock prices has ranged from -27% to + 24%. This normal distribution4 is strong evidence that five-day changes in stock prices are effectively random. Out of 21,165 observations of five-day ROCs, there have been 138 declines exceeding -8%, (0.65% of total) and 150 gains greater than +8% (0.71% of total). Accordingly, Ibbotson and Sinquefield would maintain that over any given 5-day period, the probability of the S&P 500 gaining or losing 8% or more is 1.36%. Stated differently, the probabilities of the S&P 500 returning between -7.99% and +7.99% are 98.64%.
    [Show full text]
  • The Titans of Technical Analysis by David Penn REAL WORLD
    Stocks & Commodities V. 20:10 (32-38): The Titans Of Technical Analysis by David Penn REAL WORLD A Celebration Of Technical Analysts From Dow To Zweig The Titans Of Technical Analysis A not-so-random walk through the history of charting the observations, and commentary on the subjects of trading markets. and technical analysis. From our earliest issues featuring reviews titled “An Easy Course In Using The HP-12C And by David Penn Other Financial Calculators” to the present issue, which includes pages of Traders’ Tips in sophisticated computer any years ago, a poet friend who was editing language, no other publication has had its finger on the pulse a collection of contemporary verse noted to of both applied and theoretical technical analysis for as long me that “about half the working poets in as STOCKS & COMMODITIES. And this has been no mere M America are going to be really upset about minding the store. this anthology. Of course, the other half of them are in the S&C publisher Jack Hutson introduced the TRIX, or triple book. …” exponential smoothing oscillator, in 1983. The Richard Such sentiments came to mind when I embarked upon the Wyckoff method was reintroduced to the world via these task of highlighting the few among the many whose contri- pages in 1986. John Bollinger, Jack Schwager, and Vic butions to the field of technical analysis have made them Sperandeo were all among S&C’s interviews in 1993. In the what STOCKS & COMMODITIES has designated the “Titans nine-odd years since then, as a bull market in equities resumed, Of Technical Analysis.” S&C was on hand to provide technical tools for minimizing How subjective is such a list? In some ways, all too risk and maximizing gain — whether through new indicators subjective — particularly with those whose contributions (such as John Ehlers’ MESA adaptive moving averages), new are more recent or are less widely enjoyed.
    [Show full text]
  • Relative Strength Index (RSI)
    Understanding Technical Analysis : Relative Strength Index (RSI) Understanding Relative Strength Index Hi 74.57 Relative Strength Index (RSI) is a technical indicator that is categorised under Potential supply momentum indicator. Basically, all momentum indicators measures thedisruption rate dueof riseto and fall of the financial instrument's price. Usually, momentum attacksindicators on two oilare dependent indicators as they are best used with other indicators sincetankers they near do Iran not tell the traders or analysts the potential direction of the financial instrument. Among Brent the popular type of momentum indicators are Stochastic Indicator, Commodity Channel Index and Relative Strength Index. In this factsheet, we will explore the Relative Strength Index or better known as RSI. What is RSI? WTI Developed by J. Welles Wilder Jr. in his seminal 1978 book, "New Concepts in Technical Trading WTI Systems." Measures the speed and change of price movement of the financial instruments. As RSI is a type of oscillator, thisLo 2,237.40indicator is represented as a set of line that has(24 values Mar 2020) from 0 to 100. Generally, a reading below 30 indicatesLo 18,591.93 an oversold condition, while a value above (2470 Mar signals 2020) an overbought condition. Leading vs Lagging Indicator RSI is a leading type of indicator. A leading type of indicator is an indicator that can provide the traders or analyst with future price movement. Another example of leading indicator is Stochastic Indicator. In contrast, a lagging indicator is an indicator that follows the price movement of the financial instruments. Despite their lagging nature in providing trading signals, traders or analysts prefer to use lagging indicators as they are more reliable.
    [Show full text]
  • Technical Analysis in the Foreign Exchange Market
    Research Division Federal Reserve Bank of St. Louis Working Paper Series Technical Analysis in the Foreign Exchange Market Christopher J. Neely and Paul A. Weller Working Paper 2011-001B http://research.stlouisfed.org/wp/2011/2011-001.pdf January 2011 Revised July 2011 FEDERAL RESERVE BANK OF ST. LOUIS Research Division P.O. Box 442 St. Louis, MO 63166 ______________________________________________________________________________________ The views expressed are those of the individual authors and do not necessarily reflect official positions of the Federal Reserve Bank of St. Louis, the Federal Reserve System, or the Board of Governors. Federal Reserve Bank of St. Louis Working Papers are preliminary materials circulated to stimulate discussion and critical comment. References in publications to Federal Reserve Bank of St. Louis Working Papers (other than an acknowledgment that the writer has had access to unpublished material) should be cleared with the author or authors. Prepared for Wiley’s Handbook of Exchange Rates Technical Analysis in the Foreign Exchange Market Christopher J. Neely* Paul A. Weller July 24, 2011 Abstract: This article introduces the subject of technical analysis in the foreign exchange market, with emphasis on its importance for questions of market efficiency. “Technicians” view their craft, the study of price patterns, as exploiting traders’ psychological regularities. The literature on technical analysis has established that simple technical trading rules on dollar exchange rates provided 15 years of positive, risk-adjusted returns during the 1970s and 80s before those returns were extinguished. More recently, more complex and less studied rules have produced more modest returns for a similar length of time. Conventional explanations that rely on risk adjustment and/or central bank intervention do not plausibly justify the observed excess returns from following simple technical trading rules.
    [Show full text]