A Trader Life

Introduction to Stocks and Technical Analysis

Introduction to Stocks and Technical Analysis
  • Major Indices
  • S&P 500 – Large Cap (SPX~SPY)
  • Dow Jones 30 – Industrial Average (DJX~DIA)
  • NASDAQ 100 – Electronic Trading (NDX~QQQ)
  • RUT 2000 – Small Cap (RUT~IWM)
  • Symbol nomenclature
  • 4 character symbols correspond to the NASDAQ
  • 3 or less character symbols correspond to the NYSE and AMEX
Symbol nomenclature
the character in any symbol:
  • D – New
  • E – Delinquent in required filings with SEC
  • F – Foreign
  • J – Voting
  • K – Nonvoting
  • Q – Bankruptcy Proceedings
Chart types
  • Line charts (graphs the close of each bar)
  • Candlestick charts
  • OHLC charts (Open, high, Low, Close)
Simple moving averages are calculated by dividing the sum of the close N days back and dividing by the number of data points Most widely used Moving Averages by Professionals are
  • ____day
  • ____day
  • ____day
  • Exponential moving averages put more weight on recent days than previous days
  • Bollinger Bands are used to gauge conditions of overbought and oversold, most widely used settings are 20,2 which means we will use a 20 day simple moving average as the center and go 2 standard deviations to either side from the center to create the Bollinger Bands
Oscillators are also used to gauge oversold/overbought situations they include
  • RSI
  • Stochastic Oscillators (Slow)
  • The MACD (Moving Average Convergence/Divergence) measures the separation between exponential moving averages, giving us a good idea of the trend and it’s strength
  • Volume .It gives us an idea of sentiment, ideally volume will go up on up days in an uptrend and vice versa on downtrends
Example of stochastic + macd + volume
Trend patterns
More examples
Where do they bounce back to do a pull-in? They usually bounce where they have bounced before – blue circles What are the target prices? Targets are parallel to support or resistance, loser than support or resistance – yellow lines