Timing Solutions for Swing Traders: A Novel Approach to Successful Trading Using Technical Analysis and Financial Astrology

CHAPTER 2

Let’s Get Started

Technical analysis is a rule-based trading approach. There are many ways to analyze market information, and the potential variables are endless. A trend is the general direction in which prices are headed. In using technical analysis, the objective is to identify the probable trend as early as possible. Unfortunately, early detection of an impending change in trend is not that easy. There is no single method or system that does so accurately and consistently. Thus, it would be better to use a scorecard approach based on the collective methodology described in this book. In a bull market, most stocks go up and in a bear market most stocks go down. From trial and error in our trading experience and in our research, we have noted that when a trend is underway, four trend-related dimensions give us clues. These clues may not happen at the same time, but usually occur within a span of a few bars. The four dimensions are:

1. Patterns

2. Volume

3. Price Momentum

4. Price and Moving Averages

This chapter will briefly introduce each of the four dimensions that need to be studied. The purpose of the study is to learn the strengths and weaknesses of each dimension. The trader will then be able to see from the reactions in each dimension where a change in trend takes place and how to use that information effectively in his trading. And when the trader has learned to string together all aspects of the four dimensions and to apply their coherent signals in trading, ...