Learn Technical Analysis
Take Charge Of Your Investment Decisions Using Technical Analysis
Hello my name is Mike Swanson. I can tell you about using technical analysis in stock market trading, because over ten years ago I started a hedge fund. I ran it for three years, made a bunch of money, and then went into semi-retirement. I now operate the website you are on and have some things I want to tell you about investing in the financial markets.
You may be wondering how you can compete in a financial system dominated by giant pools of money running computerized trading programs.
These programs are looking at minute by minute market data and trying do instant trades for quick profits. It is pretty much impossible for you to beat them at that game.
However, I believe that there is a way for you to do just fine in the financial markets and that is to take a longer time frame. Don't try to play the quick trends, but go for trends that last for a few years instead, because the big boys are not looking that far into the future
To do this though you need to have a basic understanding of stock market trends. That means you must learn technical analysis - which is simply a fancy word for the trend analysis of a financial market.
And I'm here to tell you that this type of strategy works in the financial markets and it really isn't that complicated. You don't need to use complicated mathematical formulas to do it either. I use traditional valuation metrics to find investments that are cheap on a price basis and chart patterns and timing strategies to decide when to buy and sell them and I know it works, because it has enabled me to make money. I share many of my ideas with an elite private mastermind group that people pay a lot of money to participate in. We have people from all walks of life in it - people from small business owners to hedge fund operators.
I can tell you success in the stock market is all about having a solid strategy when it comes to your investing. The problem is most people don't have a strategy at all and simply throw money at the markets and hope for the best.
That's not what you want to be doing to say the least. You just have to take charge of your decision making and using charts and understanding trends is the key to doing so.
Consider this website your own mini course on this topic. I have a list of the best technical analysis books you can read on this and have written one myself if you want to dig into this. Just go to the books and resources link on the top navbar of this website to check them out. But let me give you a quick overview of how this works. Once you learn it investing will be much more easy for you.
LEARN TECHNICAL ANALYSIS
When you own a stock or an exchange traded fund you have a position in a financial market. If you are aligned correctly with the overall trend of the market then it is easy to make money.
If you don't you'll lose money. It's that simple. Think about it this way - if you are owning a bunch of stocks in a bear market and the stock market is going down you will lose money. This is what happened to millions of people in 2008 when the banks went down and back in 2000 when the Internet bubble bust.
The market was actually trending down in a big bear market before the 2008 crash, but people ignored the trend and just rode things down into oblivion. I recognized the trend and was short - meaning I was betting against stocks - so I actually made a ton of money the month the market crashed in 2008.
There were trades they could have been in and made money from if you had recognized the real trends and aligned your investment positions with them at the time. That's the past though - there are plenty of trends developing now to profit from.
That's all you need to do in order to make money. You just have to learn some simple patterns and apply your knowledge.
MARKET TRENDS EXPLAINED
Let me show you the simplest and most important one. I call it stage analysis. There are four stages to a financial market cycle in a stock or entire financial market. As you know you can have a bull market. Before a bull market starts though you usually have a stage one basing phase in which a market simply goes sideways and builds a base.
Then it breaks out and begins a full blown stage two bull market that typically lasts for several years. Then there is a stage three topping phase and then a stage four bear market.
There are various technical indicators you can use to determine when these stages are coming to an end so you can make the proper adjustments. That's a topic a little too big to get into now, but we can look at the basics right now. I can quickly show you one important indicator to watch to identify the trend the market is in.
That's the long-term 150-day moving average, which is simply a line plotted on a chart using the average price number of the past 150-days.
In a bull market this line slopes up on a chart and the price of the market tends to stay above it, so it acts as a nice price support level in a bull market to make for a good entry point timing mechanism.
In a bear market this line slopes down on a chart and the price of the market tends to stay below it and it acts as resistance.
So you can use this moving average to quickly identify the trend of a market. Then you can know if you should be bullish on a market or not.
To see examples of putting this concept into action check this out:
Now there are all sorts of computerized scans I use to go through various markets and look for ETF's and stocks to trade end. I use this sort of analysis to find good risk to reward opportunities.
If you are looking for simple software to use to organize your research I recommend you take a look at TC2000 by Worden brothers, because it is what I use and doesn't have as steep of a learning curve as most of the other programs out there.
I also send updates to my friends on what I'm seeing in the markets to help you apply these principles in real time and to help you find good trading ideas in these markets. It doesn't cost anything to receive these updates. To get them all you have to do is join the free membership level for this website by clicking here.
If you get on this update list I'll also send you via email a technical analysis PDF showing you the two fold formula I use to identify the individual stocks in the market that have the best risk/reward profit potential. Just begin by clicking here.