Technical Analysis and Charting Signals

ABOUT AUTOCHARTIST
“An increasing number of clients are turning to technical analysis to help spot trends and trading opportunities.”  Technical analysis tools can also help traders find ways to make money if stock markets trade sideways, which is probable, says David Jones, chief market strategist at IG Index.

One of the main reasons retail traders (private individuals like you and me) like technical analysis is because it is something they can easily understand and practice themselves, experts say. Technical analysis focuses on pure price action, reducing the role that emotions sometimes play in clouding a spread better’s judgment when trading.

In January, IG Index launched Autochartist, an automated technical analysis package that scans the markets in real time looking for opportunities that a trader might otherwise miss because of the time needed to monitor a number of  markets or individual shares. (The package is free and available to IG Index clients direct from the trading platform. It has proved popular, registering more than 6,500 log-ons during January. )

WHAT IS  “AUTOCHARTIST”?
It is an automated pattern recognition tool that monitors various markets on your behalf and can flag up when certain criteria are met.  Traders will often look for patterns to try to forecast where the market will go next. They can set up Autochartist simply to scan the markets for patterns such as double tops, double bottoms, heads and shoulders, and so on.  A double top is when a market rallies to the same or similar level a couple of times and fails to break through. Some traders believe this is a sign that the market is running out of steam and they should sell.

A double bottom is when the market drops to a same or similar level a couple of times and does not fall any further, a pattern that many view as a buy signal.  For the more active traders, these scans can be working on very short-term charts, watching the markets during the day. For those with a slightly longer-term horizon, the application can look at a longer-term chart once a day to highlight any opportunities.

However, it would be wrong to view Autochartist as a magic wand that will find an endless number of guaranteed profitable trades. But it is definitely an effective way of tracking a number of markets without having to sit in front of the screen around the clock.”  GFT offers  its clients a fully integrated charting package that includes technical analysis tools such as Fibonacci, Gann and many more, as well as the Autochartist tool.

Technical analysis is a vast subject – there are hundreds of tools and methods that traders can use.  Beginners tend to focus on foundation tools such as support and resistance levels, momentum and moving averages.  Support and resistance levels are among the most common.  These are price points that the market consistently hits and then reverses direction. Support usually refers to points that the price drops to before rising, while resistance refers to points that the price rises to before dropping.

Some traders choose to focus on specific areas such as Elliot Waves – a technical analysis technique that believes stock markets follow a pattern of five waves up and three waves down.  City Index’s Mr Raymond says there are enough technical analysis tools to keep a trader “occupied for a lifetime”.
With the help of technical analysis and an abundance of markets to trade (beyond forex!)  there will always be opportunities  to find ways to earn extra money.
You can find out more about AUTOCHARTIST  and some REVIEWS at their website.