Chart Problems as Described by a Stock Technical Analysis Course

It needs to be pointed out that as more people are involved in the market any work to chart and predict each action , self created fluctuations in price can occur as an affect of all these actions which can end up destroying all of the various chart techniques .

As a chartist, you have lots of company . There are literally thousands of people charting all the same things you chart . So, when there’s the signal of a major move , you are liable to have a lot of the same orders as yours hitting the trading pits . In particular , the placing of stop-loss orders at identical points by hundreds of chartists , can actually make various formations like false penetrations of trend lines occur . Charting is a science that proves to be at least somewhat inexact, even for people who have a stock technical analysis course under their belts .

You can make the choice on the chart scale used and whether the mid-price or closing price is used . To plot price movements , both can be distorted . Usually the latter is used most often , but since it occurs at the day’s end profit taking is often associated with it and more. Furthermore , dynamic and unforeseeable events may play havoc with charts .

Charting is to some extent a lazy approach . The neat clinical look of a sheet of paper appeals to the many weaker brethren . Those who don’t have time or liking to go further . Most people like to think it is more productive to look at all the variations . As there is a spread of technical analysis and more decide to take a stock technical analysis course, this can defeat its purpose, especially in a market that is “thin” .

You must understand that if enough traders are trading a commodity using usual chart interpretations , it can sway the commodity’s price in the course chartists are expecting the prices to go . Their own theories can be proven right by them . Pure chartists never want to know all about the fundamentals, combining futures trading taking from both strategies is what a wise trader will try. No chart formation is completely reliable . Confirmation must be sought from various other indicators by chartists, such as changes in production from year to year, variation in business cycles , and changes in quantifiable sums like commodity prices , brought down to a single summary figure to show all the activities.

There are many times a commodity ends up going contrary to considerations that are fundamental due to a variety of different factors . To thrive the chartist must be ready for thorough study and hard work and to develop more experience. It is an art because of the technician’s finesses, skill, and experience. These are all definitely the essential ingredients of profitable trading . The technician must constantly check and re-check .

Another problem from charting is from the idea that although all the facts of a commodity situation are known to the speculator other professionals and trading houses know these very same facts.

However, truthfully some events can occur without prediction and can affect every trader. prices may not have totally discounted these happenings, in which case the chartist may be caught off-guard and little can be done to keep a position in this situation protected except to be alert to recognize sudden change in the market trend and to take action fast . (How about a hurricane carrying all the oranges into the Atlantic ).

Technicians are known to make a huge profit in one week and enormous losses the next . It is a fact of life that prices don’t change according to their performance in the past , although P&L charting can give you a good idea on a daily basis .

Most systems and their advisability are indictable because of the absence of a track record . All approaches have to be seen as unbeneficial until it has proved otherwise . To be perfectly candid , there’s little actual evidence out there to support all the rules that come with chart analysis. Trends are anticipated by various chartists . This is a falsehood . You can’t recognize or even assume a non-existent trend . If you want to utilize a trend with the method following, you must wait until the trend has been demonstrated . Even then, the chartist’s motto with regards to a trend  that until it stops, a trend continues. Again , he attempts figuring out the direction of a trend reversal as it happens. This is impossible . Only as it occurs can you become aware of a new trend that is evolving . Most of the technical systems aren’t able to predict trend reversals or trends.

If unexpected moves happen , most technicians have to begin again . After dealing with losses again and again, quite a few traders just abandon technical studies because they never work . As it is a fairly common phenomenon , it offers more proof that trading success has no short cuts and nothing substitutes for hard work, knowledge, and good experience .

All we know for sure is that prices will fluctuate , but not how much .

Only in congestion areas are you protected because this area helps to define the loss projections. In congestions, prices fluctuate . Using a technical approach that tries to take congestion areas and analyze them , and therein a trading method comes into being, will give the trader and the broker large profits, since there is congestion of commodity prices, one form or another 85 % of the time .

The main problem that novices and professionals both deal with is when to get in and out of the market . Due to this, a stock technical analysis course will help you realize that technical analysis must encompass to a considerable degree price fluctuations in the short term ( Yes, another good plug for P&L charting ).