Thursday, November 24, 2011

ChartNexus Technical Analysis Training Program Preview

Following the ChartNexus 3-hr Stock Screening Workshop I attended last week, I’ve returned for their 2-hr Program Preview last night. The trainer was the same one. I still didn’t catch his name, because he mumbles and blends his words. Frankly, if this is the trainer conducting the 4-day full seminar, I wouldn’t attend it even if I’m sold on Technical Analysis. How to tolerate 4 days of deciphering mumbles?  No offence to the trainer, I’m sure he’s highly skilled and qualified.
A short introduction on the history of ChartNexus, its products and he is ready to move on to the interesting bits.
3 Problems Traders Face
1.       What to Buy?
2.       When to Buy?
3.       When to Take Profit?
90% of Investors LOSE money in the stock market. Why?
1.       They are ignorant about ‘floor’ & ‘ceiling’
a.       Do not buy when price hits a resistance.
b.      Buy at support OR when it surpasses support

     2.       They buy because the stock is ‘cheap’.
                Cheap stocks can go cheaper.

3.       Missed opportunity. Don’t know how to cut loss
If I hung on to the losing stock above, I would have missed the opportunity to make a 100% gain on a winning stock in the same time frame. We should cut loss at 5%.

After showing us the charts that in retrospective, tells the obvious, he explained on how Technical Analysis can address the 3 problems traders face. What to buy, When to buy & When to Sell.

There are 3 Different Techniques for Different Market Conditions. Market has 3 directions; Up, Down & Sideways. By mastering Technical Analysis, traders can make profit in any market directions.

1.       Chart Pattern
a.       Ascending triangle
                                                               i.      Chart forming higher lows
                                                             ii.      Bullish signal, go long

b.      Descending triangle
                                                               i.      Chart forming lower highs
                                                             ii.      Bearish signal, go short

c.       Flag Formation
This kinda triangular flag it’s referring to, not the country flag sort
The flag formation is interesting because it comes with a profit target, which is the flag pole. We first draw the profit target = height of flag pole. Then we move it to the entry/buy point. Buy point is at the top of the flag pole. Exit point is therefore determined.
In the flag formation above, buy at 3.06 and sell at 3.22. 5.4% gain in just 3 days.

2.       Candlestick Pattern
a.       Doji
Bullish reversal pattern
Signals a reversal of trend. Tug of war in price

b.      Inverted Hammer
Bullish reversal pattern
Happens at low

c.       Bearish Engulfing
Signals end of uptrend


d.      Bullish engulfing
Signals end of downtrend


e.      Shooting star
      Long Upper Shadow
      Bearish
f.        Spinning Top
Short body, tails longer than body
Bearish

g.       Hammer
Bullish
Happens at low

h.         Hanging Man
 Hammer at resistance/top
 Bearish

3.       Indicators
20-Day MA, Bollinger band, MACD. The trainer didn’t explain much on indicators. In last week’s workshop, more emphasis was placed on indicators.

He then ended with Trading Plan,ESP, the key to profitable trading.
Entry
Stop loss
Profit target

*Source of all charts on this blog entry is from ChartNexus.

At the end of the seminar preview, I still wasn’t sold on the idea of trading using Technical Analysis. If reading chart patterns, candlesticks and indicators is all that is required for profitable trading, I might as well just buy a software that accurately spots all these and sets the E,S,P points for me. Why bother attending the 4-day program? ChartNexus actually sells an ESP software. But the point is, will I put my hard earned money on the table just because a software tell me to? I think not. Technical Analysis should never be used on its own but unfortunately, that is all ChartNexus program is about. Perhaps one day I may revisit ChartNexus program.


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