As an amature trader, I mean non-professional with no licence, which, on the flip side means; after 9 years as an amature trader I consider my style as being much like a seasoned gorilla fighter.
I have tried many websites to further my charting skills, however, after much trial, only StockCharts has the tools available to satisfy my curious nature in this art.
I was reading in Stockscharts Mailbag, (Chip Anderson gave a compelling answer) a poster complained about the complexity of technical analysis, and I must agree, but my own experience dictates a bit of different response; that if you have the wrong concept of what technical analysis is all about... It won't do what it can do, and you will miss getting into stride with it and it will indeed be elusive.
As a gorilla fighter (trader) I'm interested in only what works at making money for me, so I don't concern myself with the designing of indicators except to get a basic understanding of the implications of changing the settings and in that end, I hope my experiences works as well for you.
Addressing the complexity of money making technical analysis is a challenge; one that I feel I can answer by focusing on my gorilla concerns, but I also acknowledge that there must be some starting point of understanding that leads logically to some kind of practical conclusion. Hence, we move into a bit of the complexity of technical analysis, but approach it gorilla style.
Today I would like to establish a starting point. This exercise involves building a chart that will be forever be called your "Default Chart Study".
At first glance you would think this "Default Chart Study" is a victim of Multicollinearity but from a gorilla's perspective, it is an exercise for getting real-time experience with all the indicators and settings chosen. It is the perfect choice for a Default Study because it will demonstrate how individual (different) indicators react under the same influence for a particular stock. The purpose of the chart is to collectively compare indicators that you can group in a non-multicollinearity way. You will come back to this "Default Chart Study" time and time again to collect your emotions and get a check on reality. The settings used have come from years of comparison. You will make a very profound observation that will create an understanding that allows you to better focus where you should focus...
Customizing indicators and settings to follow the particular cycles and gyrations of an individual fundamentally sound stock can generate some pretty accurate buying and selling strategies.
"Multicollinearity" is a statistical term for a problem that is common in technical analysis. That is, when one unknowingly uses the same type of information more than once. One needs to be careful and not utilize technical indicators that reveal the same type of information. See StockChart's ChartSchool article on Multicollinearity. We gorillas must take Multicollinearity head on.
The different aspects of the chart reflects my own personal intuition but I want you to experiment and develop your own experience. Feel free to make an original and then create a copy, of which, you will stamp with your own experience.
I have chosen the size (width dimensions of the chart) because it is compatible with bull boards for posting and use it in a daily chart setting because for my purposes, it demonstrated the different variables that appeal to me. You can use the default settings in a weekly or 60 minute study with the same efficiency. After years of practice, this chart never changes for me unless I display it a weekly, hourly and at times down to one minute time frame.
The indicators are positioned in the chart in a particular order, because over time, groupings of the indicators have produced some interesting results and demonstrated some very solid visual realizations for me. I shall point out these groupings and you will avoid Multicollinearity.
You should also take notice of the settings for the individual indicators, which have developed over time, to be a medium setting that works for most deviations you may decide to create from the default chart study.
When everything is working right, you will be able to access the "Default Study Chart" nested in the "Kenuck SmallCap Trader" public charts list at this link...
TSX Default study
The TSX and Vancouver exchanges are used to illustrate the "Default Chart Study" thereby gorilla dealing with three birds in one stroke. Picking a bottom, demonstrating it, and illustrating a chart style.
GLTA Lostoutwest
Kenuck SmallCap Trader
StockCharts Public Chart List
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