A Primer to Understanding Basic Chart Patterns

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Do technical trading patterns exist and are they profitable? This is a question often asked by new traders. Depending on who you ask, the response will differ. Some academics and investors believe patterns don’t exist – that price action is entirely random, whereas the majority of technical analysts are adamant chart patterns exist and are … Continue reading A Primer to Understanding Basic Chart Patterns

The Commodity Channel Index: The Basics

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Defined in the October 1980 issue of Commodities magazine (now known as Futures magazine) by mathematician Donald Lambert, the Commodity Channel Index, or CCI, is a momentum oscillator – momentum measures the rate of change of a financial instrument. Since its inception, the indicator increased in popularity and is now a common tool for traders … Continue reading The Commodity Channel Index: The Basics

Candlestick Patterns Every Trader Should Know

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Traders and investors who adopt technical analysis typically use price charts to identify market behaviour. For that reason, before learning anything else, it is vital to understand the basics of each widely used chart (see figure 1.1 for a visual representation): A bar chart, often labelled OHLC chart, employs the use of bars, representing the … Continue reading Candlestick Patterns Every Trader Should Know

Trading the Head and Shoulders Chart Pattern

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Technical analysis is an efficient technique used to study price movements of financial markets, with its findings forming a credible guide to future market direction. One of the most well-known chart patterns is the head and shoulders formation, boasting not only high profitability, but also distinct rules for its assembly. Although considered a high-probability pattern, … Continue reading Trading the Head and Shoulders Chart Pattern

The Dow Theory: How It Can Help Traders Navigate the Markets

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Considered by many as the father of technical analysis, Charles Henry Dow was the first to create an index measuring the overall price movement of US stocks. Founded in 1896, the Dow Jones Industrial Average took its name from Dow and statistician Edward Jones. The index was a way for Dow and Jones to report … Continue reading The Dow Theory: How It Can Help Traders Navigate the Markets