Technical Analysis

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How to Build Stock Trading Rules

To plan and manage your trades, you need trading rules. A trading rule is the specific action you take when certain conditions are met. At the most basic, a trading rule instructs you to buy or sell a [more…]

Common Questions about Technical Trading

When you use technical trading in the stock market, you may have some questions about the best techniques and practices. Here are some of the most common queries about technical trading: [more…]

How to Establish a Stock Trading Profit Target

You need to establish a trading profit target so that you can answer these questions: How much is enough? How do you know when to take profits? The central issue in managing the trade is that you can have [more…]

How to Control Losses on the Stock Market

When you start trading on the stock market, you need to know how to control your losses. Your level of risk seeking or risk aversion is personal. Therefore, nobody can design loss-control rules for you [more…]

How to Use Trading Stop-Loss Orders

When trading, you use a stop-loss order to overcome the unreliability of indicators, as well as your own emotional response to losses. A stop-loss order [more…]

How to Adjust Trade Positions

You can adjust your trading position if new information suggests a stock market trade isn’t as strong as you originally thought. Often, when you’re using multiple trade indicators, you don’t get a clear-cut [more…]

How to Build a Technical Analysis Price Bar

In technical analysis, the price bar describes and defines the trading action in a security for a given period. Trading action means all the real-money transactions conducted during the period. The price [more…]

How to Buy Stocks on the Rumor, Sell on the News

Buy on the rumor, sell on the news is a primary cause of technical price developments, and in many instances, the only “technical analysis” that commentators mention. When you “buy on the rumor” and then [more…]

How to Use Price Bars to Identify an Uptrend

In finance, the central observation of technical analysis is that the price bar embodies all the supply-demand dynamics of the day and that a series of bars on a chart shows the evolution of the supply-demand [more…]

How to Use Price Bars to Identify a Downtrend

In finance, the central observation of technical analysis is that the price bar embodies all the supply-demand dynamics of the day and that a series of bars on a chart shows the evolution of the supply-demand [more…]

How to Interpret Price Bar Series

When evaluating the stock market, most of the time, a series of price bars that show higher highs with higher lows or a series of price bars that show lower lows with lower highs does mean that a market [more…]

How to Analyze Price Bar Trends by Using Relativity

You analyze price bar trends by defining when a downtrend is relatively harmless and when an uptrend is relatively significant. The textbook uptrend is a series of up-day price bars [more…]

How to Avoid Misinterpreting Price Bar Trends

A series of price bars isn’t always trended, of course, but sometimes you can misinterpret what you’re seeing if you aren’t careful. You may see a series of higher highs but forget to make sure that each [more…]

How to Know When Price Bar Reading Doesn’t Work

Reading bar charts isn’t always a clear-cut process. In bar terms, a trend has two identifiers — a series of higher highs (or lower lows) and a series of up days [more…]

How to Look at Price Bar Data over Different Time Frames

Looking at price bar data in different time frames can help you make a sound trading decision. You can zoom out to a higher time frame (such as weekly) or zoom in to a shorter time frame [more…]

How to Identify Stock Trader Sentiment in Price Bar Configurations

As an investor, market price bar configurations can give you clues about general market sentiment in order to anticipate your next move. You can use these configurations to get an impression of how traders [more…]

How to Identify Common Special Trading Price Bars

Special trading price bars almost always mean the same thing, so you can focus on a few of the common special bars with confidence in their reliability. Use logic and common sense when you’re looking at [more…]

How to Decode Trading Price Bar Spikes

Sometimes, the market delivers an exceptionally big bar with a wildly out-of-whack high or low, called a spike. A spike is a bar that encompasses a much wider high-low range than the bars immediately preceding [more…]

How to Understand Common Gaps in Trading Price Bars

A gap is one of the most important special trading price bar configurations. A gap is a major, visible discontinuity between two price bars on a chart. A [more…]

How to Understand Breakaway and Runaway Gaps in Trading Price Bars

A gap is one of the most important special trading price bar configurations. A gap is a major, visible discontinuity between two price bars on a chart. A [more…]

How to Deal with Exhaustion Gaps in Trading Price Bars

A gap is one of the most important special trading price bar configurations. A gap is a major, visible discontinuity between two price bars on a chart. Exhaustion gaps occur at the end of a trend, signaling [more…]

How to Identify Island Reversals in Trading Price Bars

In trading price bars, sometimes an exhaustion gap is followed immediately by a breakaway gap going in the other direction. When this situation occurs, it creates an island reversal in the price bar chart [more…]

How to Recognize If a Trading Price Bar Gap Will Be Filled

You may hear that a gap in a trading price bar must be filled. This emphasis on filling the gap is usually nonsense uttered by people who are trying to sound worldly and wise, but really don’t know what [more…]

How to Determine the Meaning of a Changing Trading Range

The length of the price bar, the trading range, is the difference between the high and the low. When conditions change, the average trading range is sometimes the first aspect of price behavior to change [more…]

How to Analyze the Average Trading Range

When you're analyzing investments, the trading range is a valuable analytical tool. The average trading range is the average distance between the high and the low over a specified period of time. You can [more…]

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