Starting out 2 - Technical Analysis
Hey guys! Just thought I'd post my TA questions in a seperate thread from my tax questions - might heighten of the chance of some replies =)
Thanks to Shasta for answering all my tax questions! You're a legend mate.
Ok, onto the TA:
Could someone please briefly explain each of the following technical analysis measures:
- RSI
- Bollinger bands
- Stochastics
- The significance of volume
And...
- Are standard deviation channels really that useful? Do the statistical assumptions hold true (95% of all values within 1.96 s.d., 90% withing 1.645 etc)? Surely they don't (line of best fit is not the average and can the movements really be assumed to be normally distributed)?
What would be simply excellent is if an experienced TA (Phaderus? I've read a lot of your posts and they are fantastically informative) can give me perhaps between 5 and 10 of the basic and most useful TA theories/techniques to focus on while I get used to all this sharetrading stuff. Personally, after reading some literature on the topic, I am planning on being primarily FA orientated, but I definitely want to implement some TA for trend identification purposes (the whole Fibonacci numbers things seems a bit far-fetched to me... but I'm a noob, so what do I know..? :D lol).
In summary: some basic advice on getting grounded in TA please!
Thanks guys! This forum is great (had it recommended to me by a Forsyth Barr senior broker when she realized I was simply too poor to pay her extortionate brokerage fees... >< ah the life of a poor lowly student). :)
Another MEGA NOOB Q:
I realize 'traders' trade for short-term gains, and primarily rely on TA to predict trends (profiting off the peaks, buying again on the troughs), but just how 'short-term' is short-term? The only charting software I have encountered updates awfully slowly (using downloads of Yahoo! Finance with Incredible Charts sometimes leaves me a day or two behind). I was under the impression that 'day trading' would involve identifying the smallest fluctuations in even the day-to-day, hour-to-hour patterns and buying/selling, profiting accordingly - but with the chart software I have, identifying them this precisely would be impossible (well, pretty much). Is my understanding fundamentally flawed? Or do I need to just not be cheap and actually pay for some decent software?
Thanks.