Forum Archive Index - November 2001
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[sharechat] Technical Analysis Agenda
The following is a possible agenda for anyone wanting to learn about Technical
Analysis. It is not suggested that you need to do everything here in order to
use TA effectively. Take it as far as you wish. Where applicable, some
approximate indication of cost is given.
What is Technical Analysis, and why use it?
An Introduction to basic Technical Analysis :-
The book "Technical Analysis from A to Z" by Steven Achelis has a good
introductory overview, followed by information on most of the commonly used
Examine some charts on-line, practice drawing trendlines, see if you can
recognise support and resistance levels. Try some of the technical indicators
available. Look at Bar charts, Line charts and Japanese Candlesticks. There are
many sites available, but one of the best is :- http://www.equis.com/java/ For
many people, this free charting facility is all they will ever require. More
information on this website is available in Part 6 of this series.
The website http://www.incrediblecharts.com/index.htm (recommended by the
"Intelligent Investing Team") is free, though you have to register to use it.
It has good charts, but the best feature is the large educational section. This
is one of the best online tutorials I have seen. It covers all the basics -
stops, patterns, psychology, indicators, candlesticks, buy signals, sell
signals, trends, trailing stops, P&F charts, systems, strategies etc etc. The
charts are quite good and there are over 50 indicators available. You can draw
trendlines and annotate charts. Australian stocks only, as yet.
Buy "Technical Analysis of the Financial Markets" by John Murphy. ISBN
0-7352-0066-1 $140. This 540 page book covers most of the major facets of
technical analysis, making it a good introductory text. This is one of the
three books required for the American Chartered Market Technician Program. (The
other two are "Technical Analysis of Stock Trends" by Edwards and Magee, and
"Technical Analysis Explained" by Martin Pring.)
Buy a charting program. There are hundreds available, ranging in price
from free to well over $10,000. It is possible to spend an inordinate amount of
time trying to find something reasonably acceptable for little or no outlay. If
you can afford it, go straight to buying a well-known program of good quality
such as :-
MetaStock $1200 http://www.infoscan.co.nz/meta.html
Supercharts $1050 http://www.infoscan.co.nz/
Ezy Chart Pro $800 http://www.paritech.com.au/
Insight Trader $750 http://www.insighttrading.com.au/
This is not a comprehensive list. My personal preference is for MetaStock, but
there are other good programs available. In New Zealand, more people use
MetaStock than all the others put together.
For a listing of well over 400 Technical Analysis software programs, with
details of each, go to :-
http://technical.traders.com/Products/catsearch.asp?cat=120 This site includes
a search engine, which enables you to enter the features you
require, then gives a listing of software programs meeting those criteria.
If you must have something cheaper, try the following sites :-
You will need a supply of compatible data, and some price history. (2 years
minimum. 5-10 years would be better) Package deals are available eg MetaStock,
plus one years subs to NZ data and Australian data plus 8 years NZ history plus
5 years Australian history, $1,550 http://www.infoscan.co.nz/infoprices.html
Shop around though - prices can vary considerably.
Don't even think of looking at any high-priced "black box" systems. Why not?
Read these two excellent articles :-
Join STANZ (Society of Technical Analysts of New Zealand) $50 pa. They
hold monthly meetings, see their website for details. You do not have to be a
member to attend. (Members $5, non-members $10) http://www.stanz.co.nz/
Read some books from the following titles as listed on the IFTA website
(International Federation of Technical Analysts):-
Join ATAA (Australian Technical Analysts Association) $180 pa. They have
monthly meetings (in Australia) and publish a very good bi-monthly journal
containing articles on technical analysis and trading. http://www.ataa.com.au/
Study for the ATAA Diploma in Technical Analysis. $1600. This is a two
semester course, run by the Securities Institute of Australia. It is available
by distance education (correspondence course). Full information at
The Chartered Market Technician (CMT) Program is an educational process in
which candidates study a broad range of technical analysis subjects.
Administered by the Accreditation Committee of the American Market Technicians
Association (MTA), the Program consists of three levels which must be completed
within 5 years. Further information :- http://www.mta.org/pdf/cmtbroch2001.pdf
Britain has some more complex courses with degree examinations and
Universities in USA, Europe and Sweden also provide for a degree in Technical
Get TradeStation software $6000+ This is probably the best software of all
for creating and backtesting systems. The programming language is more
powerful, more complex and more difficult to learn than MetaStock. TradeStation
has a large user base in the USA, but it is not used by many traders in NZ and
Written for the "Learning to Invest" series by Phaedrus, updated 28/11/01.
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