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that the stock’s price is lower than 10 days ago. Locations where the graph is above the reference line indicate that the stock price was higher than its price 10 days prior to those locations. Again, the idea is to find trends in this chart and use them to trade the stock at key points.

If we were to cover all varieties of technical analysis we would also cover concepts such as Stochastic (trend forecasting), Williams %R (overbought or oversold conditions), On Balance Volume or OBV (trend forecasting based on volume), Relative Strength Indicator or RSI (momentum indicator), Linear Regression (trend measurement), Bollinger Bands (trend analysis), Moving Average Convergence Divergence or MACD (relationships between moving averages), and many more. But that would go beyond the basic goals of this book. Many traders also develop their own home-grown technical analyses based on their observations of particular stocks. If it works for them, why not? In my opinion however, average investors should perhaps be less concerned with technical analysis and more with fundamental analysis. Trends and patterns are all fine, but in the long run, it is the underlying company that will determine the performance of its stock, and fundamentals can tell a lot about the company. I am not discouraging anyone from engaging in technical analysis. It is fun and educational and it delivers good results now and then. As long as we keep in mind that there is a real company behind the stock.

Regulation And More

In the world of stock trading, there is lots of money involved. Billions of dollars change hands on any day while traders buy and sell. It is then no wonder that there are many stringent regulatory conditions imposed on the stock market as a whole. For starters, stock markets have their own regulatory bodies which oversee all the activities in their own respective markets. And then there are the government regulatory …