Check out this website I found at this link
Friday, October 14, 2011
What Is Technical Analysis? | 360 Stock Charts
What Is Technical Analysis?
Typical Stock Chart
Technical Analysis is the study on how security prices behave and how to use that information to trade and avoid losses. Technical analysis illustrates the classic economic theory of supply and demand in a visual manner, that also has a predicative value in its ability to forecast future price movements, or trends, often based on probabilities and sentiment in the markets. So instead of reading a company’s financial statements or analyzing the industry conditions, technical analysis focuses on the emotions and behaviors of the company’s investors.
It is like visual investing or a visual representation of how a stock behaves over time.
Technical analysis, or stock charting, utilizes a wide variety of indicators to help predict the future movement of a stock, for example, the relative strength index or RSI, moving average convergence-divergence, or MACD, and regressions.
WHAT IS TECHNICAL ANALYSIS?
Technical Analysis is the study on how security prices behave and how to use that information to trade and avoid losses. Technical analysis illustrates the classic economic theory of supply and demand in a visual manner, that also has a predicative value in its ability to forecast future price movements, or trends, often based on probabilities and sentiment in the markets. So instead of reading a company’s financial statements or analyzing the industry conditions, technical analysis focuses on the emotions and behaviors of the company’s investors. It is like visual investing or a visual representation of how a stock behaves over time. Technical analysis, or stock charting, utilizes a wide variety of indicators to help predict the future movement of a stock, for example, the relative strength index or RSI, moving average convergence-divergence, or MACD, and regressions. Just as there are many indicators there are also many techniques, for example, candle stick charting, Dow Theory and Elliott wave theory. No one indicator or method is sufficient to guarantee profits on every trade, so the investor must learn and then decide which indicators and methods to use in his or her analysis, and then apply them with a disciplined approach. Technical analysis is one of two broad categories of analysis, the other being fundamental analysis. Some authors will try and tell you that technical analysis is only used for short-term or speculative purposes. I do not agree! Technical and fundamental analysis are siblings: Once you perform your fundamental analysis and identify potential investment opportunities, you can use technical analysis is identify entry and exit points of your investments. Think of technical analysis in this matter: How do you know whether the price today is good or bad? By comparing it to the past and forecasting into the future. Technical analysis allows you to do both. You can look at the current price in relation to the past, or historical prices, and project the current trend or direction of the stock into the future. And technical analysis goes way beyond these basic principles. It allows you to determine whether a stock is overbought or oversold, long- and short-term trends, trading ranges, and even measure sentiment. Lastly, since most of us think and see with our eyes, technical analysis allows us to ‘see’ an investment in real-time. Good investing, Kevin of the 360 Investing Guys
Wednesday, July 6, 2011
Penny stocks' trades don't make sense
I've got a friend who's intrigued by penny stocks. He's invested in a number of tiny companies whose shares sell for next-to-nothing. As for returns, he's had some big winners and some losers. What's your take on penny stocks? Are they risky?
Penny stocks are stocks of public companies that trade for less than $1 per share. Typically when you purchase a penny stock, you are gambling, not investing.
To answer your question: Yes, penny stocks are risky, for a number of reasons.
Penny stocks trade on a market exchange that is mostly unregulated by the Securities and Exchange Commission. The chances of finding a legitimate penny stock are very low.
Most penny stocks are shell companies whose value goes up and down rapidly because of the individuals trading them. They can be up 200 percent one day and down 80 percent the next, though nothing occurred in the company.
Typically, penny stocks have very low daily volume. This means you could buy and own shares, but, in some cases, have no one to sell them to. You need good liquidity in a stock, especially where the stock price can tank quickly.
Penny stocks differ from most stocks in that they have little or no following by analysts. You will rarely see a stock analyst, wire house or investment bank initiate coverage on a penny stock. Unfortunately, most of the penny stock information on blogs and websites is from individuals whose opinions are based on manipulation or touting a particular stock, vs. factual analysis.
One of my greatest concerns about penny stocks is that their price is easily manipulated. Since they have such a low share price and/or very few outstanding shares, people can easily manipulate the price by placing large buy or sell orders.
A common tactic by scam artists is called a "pump and dump." They buy many shares of a penny stock at a low price and then pump up the price by sending emails and advertisements to unsuspecting investors about this "hot stock." The victims buy into the hype, purchasing the shares and driving up the price significantly. The scam artists then sell their shares for a large profit, leaving the victims with large losses as the stock price heads south.
With penny stocks, you risk failure most of the time. Once in a while, you might get a large return if the company goes big. But over time, the losers outnumber the winners. You're much better off investing in regulated companies with a proven track record.
My advice is to stay far away, unless you are completely fine with losing most of your money.
Jeffrey DeBoer © Copyright The Sacramento Bee. All rights reserved. Original article: http://www.sacbee.com/2011/07/06/3750002/penny-stocks-trades-dont-make.htmlFor those beginners who are looking to invest in penny stocks, an interesting read from Jeffrey DeBoer. Penny stocks are highly speculative and absolutely not recommended for beginner investors. It's easy to get sucked in to the hype when it comes to penny stocks but you take significant financial risk when you buy these stocks. Often penny stocks trade on over the counter (OTC) exchanges as well. These exchanges have less regulatory hurdles than larger exchanges which often creates opportunities for management to 'get away' with alot more than they otherwise would. We will cover OTC exchanges in our upcoming webinars and look forward to discussing the downside to penny stocks with you more!
Subscribe to:
Comments (Atom)