It is all about price
Price is the product of collect effect of market crowd. Buyers and sellers tussle . Prices always include all underlying information, news and people’s assumptions. This is also called as . As assumptions changes or news flow continues or fundamental changes we see rapid rise or fall in prices. All underlying information consist of hundreds of factors like market or stock facts, market opinions, wild guesses and trading emotions. All these factors changes supply demand equations every second that why new prices are discovered literally every second.
Dow Theory and price
Charles Dow one of the founder of “the wall street journal” stated that in market only one thing is true and that is “price”, because prices always effortlessly concluded their journey, regardless of underlying facts, rumors and market noises. In my view, Price is the only information a traders can trust. Some of the Dow observations also called as “dow theory” are 1. Prices most of the time moves in . 2. Trend can recognized and they appear regularly and repetitively. 3. Primary trend and major trend while secondary trend are called retracement and not easy to trade with. 4. Trend likely to continue until something occurs.
Price and value
Price and value are to different things. while fundamental analysis can judge value. Stock trading above it value called as overvalued this might be due to companies prosper future, market rumors or due to shows and discovers pricesnews based emotions. Difference between real value and price called as “premium”. Vice versa is true for stock is trading below value. Here the difference is called as “discount”. These premium and discount always matter to long term investors. While some smart traders use both technical analysis and fundamental analysis to trade better and also to control risk. For example, in bear market, blue chips ( ) didn’t fall that much as compared to midcaps and small cap companies stocks. Trading in major index stocks is comparatively less risky than other. Major index stocks are always included or excluded on their major fundamentals and company management quality by market regulators. Using fundamental analysis along with technical analysis is like catalyst. It only increases your chances of winning. Professional traders always choose fundamentally sound or highest quality stocks to trade. And use technical analysis to make their buy or sell decisions.
Price and technical analysis
Technical ideas are not new to the world, you can fetch them as back as Technical analysis used and developed by many brainy peoples around the world, because you know mathematics is not a game for fools. Technical analysis was there way before computer, trading systems and . It is not a cult because it is survived almost 200 years and will continue to help traders in future. New ideas, indicators, charting style adds every years and make traders knowledge better and better..