Does Charting Really Help?

[krisbarry]

I am still unsure and very confused. I have entered in stock codes on chart websites and very different results are displayed. All time frames and frequencies are the same though.

How can the (RSI) relative strength of a stock be going down, the share price going up and the momentum going down on one chart. Transfer the same stock code to another chart and it shows the chaikin money flow up, share price up and volume up?

 

[tech/a]

Kris.

90% of indicators are lagging.
Lets take RSI.
Its a relative strength of the LAST 14 days.So with price rising today chances are it wont be rising until tommorow or even the day after.

While all indicators are made up of combinations of Open Close high low volume and open interest its the way and timeframe of allocation which will see them giving different values.

When evaluating analysis look at the following.

PRICE ACTION is NOW analysis the bar will tell you whats happening NOW and whats likely to happen tommorow. Like a dot at a place on the chart.

INDICATOR or OSCILLATOR analysis is like a CIRCLE on a chart its encompassing an area of likely price action at AROUND the time of analysis.

COMBIMING the 2 will give the best analysis.(technically speaking).

There seems to be an interest in indicator education so far 2 have shown interest ---if there are a few so we can have some good dicsussion Im happy to run a thread on the topic.

 

[Milk Man]

yeah great idea

 

[krisbarry]

Thanks Tech/a,
your info sheds light onto the differences in charts, much appreciated.

 

[nhojmabon]

My advice would be to not rely on indicators unless you really know what your doing, the only indicators I ever use are on-balance volume and guppy multiple moving average, I find that indicators are too often misused and over-used.

The RSI is a very confusing indicator for beginners and it isn't very reliable at all unless you really understand how the RSI is forming and how it relates to the stock activity.

Happy trading

 

[excalibur]

As a beginner I would not yet start investments based upon charts using indicators.
If you wish to have an overall information upon them, here is a great link:

http://stockcharts.com/education/IndicatorAnalysis/indicators1.html

Happy research

 

[ob1kenobi]

I find it very useful in locating worthwhile stocks, ones that suit my portfolio and financial goals. I also find the background research I do on a company useful, as is the Fundamental Analysis that I carry out. I tend to only move forward if these three things line up and make sense. I call it triangulation. This technique is also useful for shares you might hold for 12-18 months. Your strategy needs to be effective and the measure of that is whether or not it allows you to reach or move towards fulfilling your financial objectives. If it does this, then it works for you and is thus effective. Good luck!

 

[mime]

I'll be honest, I don't believe in charting but that's my opinion. I can't see how a stocks past will predict it's future. For example look at multiplex. Could a chart predicted it's fall?

I've found it's easier to predict stocks through external factors but again that's my opinion.

 

[wayneL]

I can't see how a stocks past will predict it's future. For example look at multiplex. Could a chart predicted it's fall?

This is a common misconception that charting is about prediction.

It isn't!!!!!!!.....Although some people ( Gannists etc ) try to make it so.

Charting is just a visual method of devising a positive expectancy trading method. That's it!!! When people realise this they can become profitable. This is not opinion, it is fact!

Cheers

 

[Milk Man]

This is a common misconception that charting is about prediction.

It isn't!!!!!!!.....Although some people ( Gannists etc ) try to make it so.

Charting is just a visual method of devising a positive expectancy trading method. That's it!!! When people realise this they can become profitable. This is not opinion, it is fact!

Cheers

spot on wayno!

and, no, you can't have predicted multiplex's fall but with a sound strategy in place you may have lost 5-10%

 

[CCBUFX]

Charting only help if you know the pro and cons of each indicator. From my previous experience as a FX trader I use charting to confirm a fundamental trend.