Part 19 Technical Analysis – Consolidation and Divergences

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Aggregated Information Representation for Technical Analysis on Stock Market with Csiszár Divergence

  • Ryszard Szupiluk
  • Piotr Wojewnik
  • Tomasz Ząbkowski

Abstract

The paper presents a new method for multidimensional representation of financial information in the context of technical analysis. Typically, technical analysis of given financial instrument does not take into account a broader view on the market. We want to analyze the information about the environment of the primary instrument. Hence, there is the problem of the results synthesis in a coherent and a transparent way. In this paper we propose aggregation of the information from different sources into a single aggregate graph which enables a technical analysis. The complete information is obtained with the p-norms approach. To assess the impact of particular information on the primary instrument we applied divergence measures such as Csiszár divergence and Beta divergence. Practical experiment on the stock exchange data confirmed the validity of proposed approach.

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Advanced Technical Analysis

Course Overview

eduCBA brings you this Awesome course on Advanced Technical Analysis Training. This detailed course will help you understand all the important concepts and topics of Advanced Technical Analysis.

Advanced Technical Analysis Training Courses

Study the past to learn the future. That’s the basic idea behind the seemingly complex subject of technical analysis. Those in the profession are often called “chartists”, besides being more popularly known as technical analysts. They use mathematical and statistical formulas and data visualizations on the price movement for studying the performance of an asset class over time. They then advice on buy, sell, or hold recommendations, depending on history repeating itself. There are several technical analysis tools that can be used automatically, or in combination, to arrive at a supply-demand trading strategy.

The advanced technical analysis training course is designed for individual stocks, exchange traded funds, index futures, and similar other instruments for analyzing the market trends and behaviors so as to distinguish, classify, and properly time the trades. In this course you’ll learn how to determine a market’s overall direction and then take a call which is congruous to the market. Curriculum of the advanced technical analysis training course is focused on price-based technical analysis using major indices as forecasting instruments.

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There are a number of approaches to technical analyses. These include the Elliot wave theory, Dow Theory, cyclical analysis, Fibonacci analysis, and many others. The most popular methods are divided into two key branches, known as the statistical approach and chart analysis (commonly known as charting). With the chart analysis, the technical analyst tries to hunt for patterns forged by price movements of a particular stock and one that occurs repeatedly. Patterns like double bottoms or head and shoulders, for instance, are taken as typical chart patterns. When the technical analyst detects such a pattern, he/she executes a trade depending on the price direction expected to be followed, depending on the pattern.

The other branch, statistical analysis, is comprised mostly of research and use of many technical indicators. These are derived from the historical market data of the stock and are largely used to forecast changes or reversals regarding the strength of trend. Several of these statistical indicators project buy and sell points. There are various types of indicators, from simple ones like moving averages, to a more complicated one like the swing index, for which complex mathematical formula of several lines is used. Technical analysis monitors the price movement of the stock and may not recommend a buy or sell call. It’s the analyst who has to read into the analysis and decide.

What you’ll learn

Here are some of the key concepts you’ll learn in the advanced technical analysis training course.

  • In-depth introduction to advanced technical analysis along with its merits. Also, understanding trader psychology and how to trade successfully by forging the perfect blend.
  • The key traits required to become a seasoned technical trader along with the disciplines you have to adhere.
  • Understanding how to come up with a healthy trading psychology that has to be different from the crowd.
  • Principles of Dow Theory i.e. interpreting trends and then combining them with all support and resistance levels to sharpen the entry and exit signals for both positional and day trading.
  • Understanding chart patterns, the psychology that works behind a chart pattern and its formation, interpreting the patterns, the importance of volumes while using the patters, and finally, evolving a trading strategy that’s based on the patterns.
  • In-depth study of the moving average concept and the role it plays to determine the trade. Learning the multiple uses of moving averages at different time horizons for the trades.
  • Setting unconventional as well as classical indicators and their application towards positions, investments, and day trading.
  • Using Fibonacci to set price targets.
  • Trading in Futures and Options with a fundamental study of risk, reward, and timing related to the derivative-based trading approach.
  • Exposure to real life circumstances using mechanical systems along with technical analysis. You learn about running scans and stock picking on a real-time basis.
  • Money management and coming up with a mechanical trading system.

What is advanced technical analysis?

Simply put, advanced technical analysis is the study of investment behavior and the effect it has on price action of financial instruments. The key data we need to carry out our study include the price history of the stock or the particular financial instrument, along with the volume and time information. It helps us to form our views, depending on certain facts.

Technical analysis versus fundamental analysis

Fundamental analysis is concerned with determining the value of stocks and similar other trading and investment instruments. Fundamental analysts bother themselves with the complex relationships between demand forecast, financial statements, the quality of the management, growth and earnings, and similar factors. They would then apply their judgment on the stock or commodity, or the financial instrument, which is often relative to the sector or market peers to form a judgment whether it’s over or undervalued.

Most of the stock research carried out by investment banks or brokers are based or company fundamentals. At EduCba, we admire much of this work and take a more practical approach to investing and trading. We analyze the ways by which investors interpret fundamental data and how they behave. This behavior, collectively, is called investor sentiment. It’s often the key factor to determine the fair price of an instrument.

Technical analysis, on the other hand, holds the key to monitor investor sentiment. Many experts and investors believe that technical and fundamental analysis is exclusive of each other. But the fact is that both of them are actually complementary and works together and informs you what and when to sell or buy. Most successful traders use a combination of fundamental stock selection and technical analysis timing filters with profitable results.

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It should be remembered that technical analysis, particularly chart reading, is highly subjective. The success is hugely dependent on the experience of the advisor or user. A more experienced analyst will be better equipped to determine the pattern of the price movement or a probable trend reversal. That’s one of the major reasons why most stock traders combine fundamental analysis with the technical part. In such cases, technical analysis is the most suitable to plan the buy and sell points for the positions. It makes the difference between the profit or loss derived from a stock, especially in Futures and Options trading.

Important points of technical analysis

Here are some of the main things we get from technical analysis.

  • Study of the price charts i.e. historical prices of a stock in conjunction with the present
  • Works best for stock that are traded in huge volumes.
  • Largely based on the law of demand and supply
  • Projects the mindset of a greater number of people

Course description

The advanced technical analysis course description is as follows.

  • Introduction: You are introduced to technical analysis concepts in this section.
  • Moving averages: This section is divided into six parts. You get to learn about the types of moving averages, time span, exponential moving average, the 100 day EMA chart, simple versus exponential moving average, and moving average settings.
  • Understanding momentum: Topics covered in this section include introduction to momentum principles, rate of change indicator, selection of the time span, interpretation of momentum characteristics, and oscillatory characteristics in the bull and bear markets.
  • Overbought and oversold: This section is divided into six parts. It includes understanding of the overbought and undersold region, overbought and oversold crossovers, mega overbought, oversold and extreme swings, simple and complex divergence, and smoothed momentum indicator.
  • Float and float turnover: This section is divided into 15 parts. Topics covered include introduction to float analysis, the float and float turnover, smart money and losing money scenario, importance of float analysis at the top and bottom, the principle of float analysis, 10 discoveries to understand float formation, inverted flag formation, understanding and profiting from the float turnover, redefining support and resistance, valid breakouts, successful strategies, playing the upside and downside, and float analysis formation.
  • The art of asset allocation: This is the last part of the curse. You’re introduced to the art of asset allocation, followed by the process, personal investment strategy, suggested allocation, and seven steps to plan your financial life.

Requirements

This is an expert level course and a bachelor’s or a master’s degree in a business major, like finance or economics is required to pursue it. Mathematics or statistics graduates are also eligible. Some firms require their technical analysts to be MBAs. Though it’s an expert-level course, it begins with the fundamentals of technical analysis, following which you’ll learn about the various advanced strategies. Every individual who wants to make a career out of the stock market can join this course. It’s open to working professionals, students, retired officers, housewives, novice traders, business personnel and any other interested person.

Technical analysts must have both analytical and critical thinking skills. They have to deal with the public in general and present strategies and financial data. They should have good communication skills. Those wanting to join the advanced technical analysis training course must have experience in working with electronic spreadsheets and analysis software. We recommend participants to take the technical analysis with iCharts training before joining this advanced course.

Target audience

The advanced technical analysis training course is targeted at the following.

  • Undergraduates who want to make a career in technical analysis.
  • Students wanting to seriously pursue technical analysis as a career.
  • Investors and traders who want to make money in the capital markets using advanced technical analysis.
  • Non-finance professionals and career changers who want to cultivate an extra area of proficiency or people seeking to change their career into stock trading.
  • Investment and treasury professionals working with banks or nonbanking financial institutions.

FAQs: Some general questions

  1. How can I take the course?

The entire course will be conducted online with video tutorials. There are more than seven hours of HD videos with over 38 lectures by expert faculty.

  1. Do you provide any placement services?

No. EduCba trains professionals to become leaders of the market. They emerge as experts in their own fields. Our trainees have reportedly got better job offers than others.

  1. Can I take a break from the course?

All our courses are self-study and you can take them at your convenience. But a long gap between two sections is not advisable because that disturbs the flow of learning.

  1. From where can I access the tutorials?

Since all our courses are conducted online, you can access them from all over the world. A computer and a broadband connection are all that you need.

Testimonials

Sudhindra Khaitan

“The advanced technical analysis course by EduCba really helped me to make a mark in by stock broking career. I can now advice my clients better on trading strategy.”

Pushpa Kedia

“I am a chartered accountant by profession. I would like to thank EduCba for all the quality technical analysis training they gave us. I got to know many important concepts that I couldn’t understand before.”

Sushil Ayyar

“EduCba doesn’t support the mugging up concept. You have to understand all the concepts and only then you can make a mark as a technical analyst. The course was very enjoyable.”

Pratik Poddar

“Thanks to EduCba, I am working as a technical analyst in a top broking firm. I got several job offers after I took the course. I joined it after completing the technical analysis with iCharts training course from EduCba.”

Career benefits

Some of the major career of the course is given below.

  • Know how to prepare for the trading day and according to market conditions
  • Identify the market moves before they take place
  • Pocket large one-three daily gains using the swing trading technique
  • Have control on your order flow and act like a market maker
  • Identify the correct trading style, develop it, and know how to adapt to the changing market conditions.
  • Master and operate a good and sophisticated trading platform with a technical analysis software which is used by professional traders.
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12. Tech analysis (Web + Sch Note)

Термины в модуле (30)

A) both rational and irrational behavior.

B) rational behavior during calm markets and irrational behavior during volatile markets.

A) all analysts have all current information.

B) the market is efficient.

A) Markets are efficient and all known information is reflected in prices.

B) Prices are determined by supply and demand.

A) the incorporation of psychological reasons behind price changes.

B) ease in interpreting reasons behind stock price trends.

A) tracking the index.

B) outperforming the index.

Relative strength: When prices of an individual stock or industry change, it is difficult to tell if the change is stock specific or caused by market movements. If two variables are changing at the same rate, the ratio created by dividing one of the variables by the other will remain constant. This is called the relative strength ratio.

A) changes of direction in price trends.

B) the length of time over which trends persist.

A) support level.

B) resistance level.

Support and resistance levels. Most stock prices remain relatively stable and fluctuate up and down from their true value. The lower limit to these fluctuations is called a support level – the price range where a stock appears cheap and attracts buyers. The upper limit is called a resistance level – the price range where a stock appears expensive and initiates selling.

A) decrease substantially.

B) increase substantially.

Support and resistance levels. Most stock prices remain relatively stable and fluctuate up and down from their true value. The lower limit to these fluctuations is called a support level – the price range where a stock appears cheap and attracts buyers. The upper limit is called a resistance level – the price range where a stock appears expensive and initiates selling.

A) demand for a stock to increase substantially.

B) supply of a stock to decrease substantially.

Support and resistance levels. Most stock prices remain relatively stable and fluctuate up and down from their true value. The lower limit to these fluctuations is called a support level – the price range where a stock appears cheap and attracts buyers. The upper limit is called a resistance level – the price range where a stock appears expensive and initiates selling.

convergences and divergences – UNCTAD Paragraph 166 Course

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