TECHNICAL CHARTS UNDERSTANDING TECHNICAL CHARTS

Transcription

1 TECHNICAL CHARTS UNDERSTANDING TECHNICAL CHARTS

2 Overview is an advanced charting application specifically designed to display interactive, feature rich, auto updated financial charts. The application provides users with the ability to perform advanced technical analysis online. It is a secure and powerful, yet easy to use, online technical analysis application with the ability to display historical and intraday charts, allowing users to develop and test personal investment strategies.

3 Features Charts update automatically without having to refresh the screen. Charts are highly customisable including the ability for the user to save settings, preferences and studies for later retrieval. Professional technical analysis programme which may be operated inside the browser, or detached and used in a separate window in full screen mode. Offers the capability to define and test investment strategies and indicators. The ability to export the chart directly in PNG format or print chart directly from the application. Add user defined text and graphics (arrows) to charts. Benefits Continuously updated charts Instant access to professional analysis software Ability to develop and test investment strategies Access to a multitude of predefined indicators and the ability to create new ones Ability to draw and analyse trendlines, formations, support and resistance levels Ability to customise charts, indicators and favourite symbols Fast access to large amounts of historical and intraday data Specifications 1. Configuration Capabilities Number of customisable parameters Technical Analysis Specifications Number of built in indicators 51 Trendline and formation drawing Support and resistance levels Fibonacci retracements Regular retracements Parabolic Stop and Retracement Pivot Points Displaced Moving Average User defined Simple and Exponential Moving Averages Automatic buy and sell signals for several indicators 3. Charting capabilities Linear scale Semi logarithmic scale Line charts Bar charts Candlestick charts Volume charts Quote information display Multiple stock performance comparison Chart area maximisation User applied notes and arrows Export graph image Print function

4 Maximise/minimise Enable/disable browser cache Auto update data Audible data refresh indicator Data refresh Adjust chart range Data Range Chart type Scale selection Chart customisation Time frame settings Data compression % scale with performance comparison Show/hide volume Primary Symbol User defined trendline Volumes Secondary symbol Technical Indicators Load and save settings Maximise chart Load and Save Studies Print Export image to PNG

5 Getting Started 1. Displaying charts To chart a specific instrument simply enter the instrument ticker code into the primary symbol field located toward the top left of the charting application. Alternatively, if you have instruments already saved as favorites as listed on the left of the chart, you may select a symbol from this list by simply clicking the required instrument. To draw comparative charts, enter the secondary instrument ticker symbol name into secondary symbol field located toward the bottom left of the chart. ou can also compare performance of multiple stocks by first selecting the percent (performance) scale and then selecting multiple symbols. Please note, that when you enter a new symbol, it is automatically added to the list of favorite symbols for your convenience. 2. Working with indicators As a default, 2 technical indicators are displayed in the bottom 2 windows of the charting application. Users may select from 47 additional indicators from the Indicator Selection drop down menu as appearing in the second toolbar at the top of the application. The first dropdown controls the display in the 1 st indicators display window while the second dropdown controls the lower display chart. Select an indicator from the list by left clicking on the required indicator. This will automatically populate to the chart. The indicator parameters may be adjusted using the free text fields appearing to the right of each indicator. Enter desired parameter value and press [ENTER], to apply the new parameter. If multiple charts are displayed at the same time, then the indicators are calculated for the primary chart. 3. Moving Averages Include an exponential moving average, displaced moving average and up to three simple moving averages with varying default period settings by clicking on the EMA, DMA, SMA1, SMA2 or SMA3 buttons in the task bar above the chart. Default period settings appear in the window to the right of each of these buttons for exponential and simple moving averages while a new pop up window is returned when selecting the displaced moving average. ou may alter these default settings by mouse clicking on the window, rendering this window a free text area and typing in your own settings. Press enter and your user defined moving average will plot in the chart. 4. Chart customisation Using the options available in the first toolbar, you can set a chart type, a scale, data compression or adjust the amount of data displayed. To customise line widths and colors press the "chart customisation" button (located on the right side of the first toolbar). 5. Working with trendlines, formations and other objects ou can draw various objects on the chart such as trendlines, support/resistance levels, Fibonacci Retatrcements as well as Regular Retracements using the mouse. First, right click on the chart area and select an object in the pop-up menu of the chart. Press the left mouse button and drag the mouse to draw an object within the charting area. To move an object, hold the [SHIFT] key in conjunction with the left mouse button in order to shift the object to the desired location. To delete an object hold the [CTRL] key (in automatic drawing mode) and left mouse click on the object. ou can also change automatic drawing mode using an option in the pop-up menu. Similarly, text and arrows may be included in the chart by making use of the right click menu function described above.

6 Getting Started (Cont) 6. Optimising program performance Pressing the "timeframe settings" button will enable you to set the maximum amount of data processed by the system. Setting a shorter timeframe will increase the system performance. This can be important if you are using a slow computer or a low bandwidth internet connection. 7. Storing and loading configuration settings ou can store and later load your preferred configuration settings, using "load configurations" and "save configuration" status bar buttons. The following settings can be stored: a) favorite symbols along with current selection of primary and secondary symbol b) cache usage and automatic data update settings c) selected indicators d) defined indicators e) indicator parameters f) chart type, scale and data compression g) chart colors and line widths In addition to the settings listed above, individual studies (including indicators, their parameters and objects on the chart) can be saved and later restored for a given security using the buttons on the bottom of the programme window. Functions 1. Maximise/minimise window Allows you to expand the charting application to view in full screen. When viewed in full screen, the same function allows you to minimise the chart. 2. Auto update data By default, this option is set to auto update the chart every 60 seconds. This is particularly useful when viewing intraday charts. This function may be disabled/reenabled by clicking on the button. 3. Data refresh ou may manually request a data refresh from the system by clicking on the data refresh function. This will repopulate the current chart with the most recent data. 4. Scroll chart left/right 10 years of history is available to the chart. In order to view more history than provided in the default display, simply use the scroll left function. In order to return to latest date, make use of the scroll right function. 5. Zoom in/out Allows you to increase/decrease the amount of data presented in the display.

7 Functions (Cont) 6. Select date range The default date range displayed in the chart is 6 months. ou may however alter this period by making the relevant time selection from the date range drop down menu. 7. Select chart type a) Line chart: The system will always default to a basic line chart indicating instrument trade prices. b) Bar chart (OHLC): The bar chart displays Open, High, Low and Close values per trading day. The top and bottom extremities of each vertical line indicates the respective high and low. The horizontal stroke to the left of the vertical line indicates the opening price while the horizontal stroke to the right indicates close. c) Candlestick charts: The upper and lower extremities indicates the highest and lowest traded prices of the instrument while body indicates the opening and closing trades. If the instrument traded up from open, the body is green, with the opening price at the bottom of the body and the closing price at the top. Conversely, if the instrument traded down from open, the body is red, with the opening price at the top and the closing price at the bottom. 8. Logarithmic scale A type of scale used on a chart that is plotted in such a way that two equivalent percent changes are represented by the same vertical distance on axis, regardless of what the price of the instrument is when the change occurs. The distance between the numbers on axis decreases as the price of the underlying asset increases. Charts are by default returned using a logarithmic scale. 9. Linear scale Where users have elected to view a linear scale chart, the values on the axis are spaced equidistantly. Each unit (price) change is represented by the same vertical distance on the chart, regardless of what price level the asset is at when the change occurs. 10. Axis correlation This function applies when viewing two instruments on the same chart. As a default both instruments are graphed on the same axis scale. If you elect to remove the axis correlation, each instrument will make use of its own axis scale in order to overlay the charts. This is particularly useful when viewing 2 instruments with significantly different price values. 11. Percent scale This function bases all instruments in the chart to zero making it an ideal tool to compare price performance across a number of instruments. This chart therefore reflects price movements as opposed to actual instrument prices. 12. Data compression window This window allows you to select the graphing period, e.g. Intraday, Daily, Weekly or Monthly. The default chart presented is a daily chart with user defined selections being made from the window dropdown.

8 Functions (Cont) 13. Timeframe settings These settings allow you to change the amount of data that will be downloaded and processed by the application. Only the most recent data (data inside the selected timeframe) will be available for display. The shorter the timeframe the faster data may be processing and lower bandwidth usage. This option may be especially useful when using low end computer or slow internet connection. 14. Chart customisation This option allows you to alter the chart colours and line width away from the default settings. 15. Show/hide volume panel The volume chart displayed directly beneath the main charting window may be removed from view, thus enlarging your main charting area. 16. Indicator selection windows These windows are used to control the displays in the 2 technical charting areas at the bottom of the application. ou may select from 48 available indicators using the selection dropdown menu. This function is only available when the programme window is maximised. 17. Indicator parameter Default parameters are supplied by the system. These default parameters may be altered by first highlighting the relevant indicator in one of the two indicator selection windows discussed in 16 above. ou may then enter your own user defined parameters into the windows then press enter. The relevant technical chart will update to reflect your new parameter input. 18. Parabolic stop and reversal indicator (PAR SAR) This indicator may be used to set a trailing stop loss. To activate/deactivate this indicator, click on the PAR SAR selector. This indicator presents directly in the main charting area. 19. Pivot points (PIV PTS) A technical indicator derived by calculating the numerical average of a particular instrument's high, low and closing price. The pivot point is used as a predictive indicator. If the following day's market price falls below the pivot point, it may be viewed as a new resistance level. Conversely, if the market price rises above the pivot point, it may act as the new support level. 20. Displaced moving average A moving average which may be adjusted forward or back with a view to predicting market/stock trends. Displaced moving averages are constructed by taking the moving average and shifting it by a number of intervals, either positive or negative. If the number is negative, the displaced moving average will lag the original moving average, and if the number is positive the displaced moving average will lead the original moving average.

9 Functions (Cont) When selecting the Displaced Moving Average, you will be presented with a new window with default settings on arithmetic versus exponential averages, period, displacement and direction of displacement. All the default settings may be altered to reflect user preferences. By clicking on the Apply Settings button, the Displaced Moving Average will be drawn in the main charting area. 21. Bollinger bands Allows you to compare volatility and relative price levels over a period of time. To activate/deactivate this indicator, click on the BOL selector. This indicator presents directly in the main charting area. The simple moving average used in the calculation of the Bollinger band may be changed away from the default setting by changing the figure in the window to the right of the BOL selector button. 22. Exponential moving average (EMA) The Exponential Moving Average is similar to a simple moving average, except that more weight is given to more recent data. This indicator presents directly in the main charting area. The moving average period may be altered away from the default setting by changing the figure in the window to the right of the EMA selector button. 23. Simple moving average Three default moving averages are offered within the system with each activated individually by clicking on SMA1, SMA2 or SMA3. The moving average periods may be changed away from the default settings by changing the figure in the window to the right of each SMA selector button. Technical Indicators 1. Acceleration (ACC): Chart pattern where the rate of change of share price increases sharply. 2. Accumulation Distribution (AD): Tracks buying and selling pressure. 3. Average True Range (ATR): Volatility indicator. 4. Balance of Power (BOP): Momentum indicator that measures buying and selling pressure, giving an indication of the degree in which individual instruments and the market in general are overbought or oversold. 5. Bollinger Band (BOL): Provides several useful signals including confirmation of trend and an indication of volatility. 6. Bollinger Oscillator (BOS): Computes the position of closing price relative to the width of the Bollinger Bands. 7. Chaikin A/D Oscillator (ChAD): The degree of buying or selling pressure can be calculated by the location of a close relative to the high and low for the corresponding period.

10 Technical Indicators (Cont) 8. Chaikin Money Flow (ChMF): Intended to show whether a given equity is within a buying trend (money flow in) or a selling trend (money flow out). 9. Chaikin Oscillator (ChO): Created by subtracting a 10-day EMA from a three-day EMA of the accumulation/distribution line. 10. Chaikin Volatility (ChV): By comparing the spread between an instrument s high and low prices, it quantifies volatility as a widening of the range between the high and the low price. 11. Chande Momentum Oscillator (CMO): Determines the momentum of price data by comparing the size of recent negative price changes to the size of recent positive price changes. 12. Commodity Channel Index (CCI): An oscillator that provides an indication of overbought or oversold markets. 13. Detrended Price Oscillator (DPO): Smoothes the trend in prices, allowing more easily identifiable cycles and overbought/oversold levels. 14. Directional Movement Index (DMI): Helps determine if a security is "trending." 15. Displaced Moving Average (DMA): A moving average which may be adjusted forward or back with a view to predicting market/stock trends 16. Ease of Movement (EMV): Illustrates the relationship between volume and price change. 17. Elder-ray Bear Power (EBear): Measures the amount of buying and selling pressure in the market. Long positions are often taken when the bear power has a value below zero but is increasing and the bull power's latest peak is higher than it was previously. The slope of the EMA can also be used to help confirm the direction of the trend. 18. Elder-ray Bull Power (EBull): Measures the amount of buying and selling pressure in the market. A short position is often taken when the bull-power value is positive but falling and the bear power's recent low is lower than any other previous bottom. The slope of the EMA can also be used to help confirm the direction of the trend. 19. Exponential Moving Average (EMA): This type of moving average reacts faster to recent price changes than a simple moving average. 20. %D Fast (FastD) 21. %D Slow (SlowD) 22. %K Fast (FastK)

11 Technical Indicators (Cont) 23. Force Index (FI): Combines price movements and volume to measure the market. 24. Intraday Momentum Index (IMI): Combination of the Relative Strength Index and Candlestick Analysis. 25. Mass Index (MI): Range oscillator that uses changes in daily trading price and provides market reversal forecasts. 26. Moving Average Convergence Divergence (MACD): A trend following momentum indicator used to signal trend changes and to indicate trend direction. Signals are generated by crossovers and divergence from price. 27. MACD Oscillator (MACDO): Converts the two lines of the MACD into a single line that fluctuates above and below zero. 28. Momentum - type 1 (MTM1): Measures the speed of price change and provides a leading indicator of changes in a trend. 29. Momentum - type 2 (MTM2): Measures the speed of price change and provides a leading indicator of changes in a trend. 30. Money Flow Index (MFI): A divergence between the money flow index and price trend can warn of a possible trend reversal. 31. Negative Volume Index (NVI): Used in conjunction with the Positive Volume Index, it's an attempt to identify bull markets. 32. On Balance Volume (OBV): Used to either confirm the current price trend or warn of a possible reversal. 33. Parabolic SAR (PAR SAR): Useful in catching new trends early. 34. Pivot Points (PIV PTS): Derived by calculating the numerical average of a particular stock's high, low and closing prices. May be used as a predictive indicator. If the following day's market price falls below the pivot point, it may be used as a new resistance level. Conversely, if the market price rises above the pivot point, it may act as the new support level. 35. Positive Volume Index (PVI): Calculated based on price movements on days with increased volume. 36. Percentage Volume Oscillator (PVO): Percentage difference between two moving averages of volume. 37. Price Oscillator (POS): Shows the variation among two moving averages for the price of an instrument.

12 Technical Indicators (Cont) 38. Price and Volume Trend (PVT): Cumulative total of volume that is adjusted depending on changes in closing prices. 39. QStick Indicator (QStick): Developed as a way to quantify candlesticks, the indicator is a moving average of the difference between the opening and closing prices of an issue. 40. Rate of Change (ROC): Momentum indicator measuring velocity and also leads the price action. 41. Relative Strength Index (RSI): Provides early warning of a sell or buy opportunity. 42. Relative Volatility Index (RVI): Used to measure the direction of volatility. 43. Simple Moving Average (SMA1, SMA2, SMA3): The average stock price over a user defined period. 44. Standard Deviation (StDev): Statistical measurement of volatility. It measures how widely values range from the average value. 45. Stochastic (STS): Determine when a market is overbought or oversold. 46. Trend Deviation (TRD): A moving average of volume is divided by another, and a smoothed rate of change. 47. TRIX Index (Trix): A 1 day rate of change of a triple exponentially smoothed moving average of closing prices. 48. Ultimate Oscillator (ULT): Sensitive to buying and selling pressure and offers reliable signals. 49. Volatility Ratio (VLT) 50. Volume Moving Average (exponential) (VOL EMA) 51. Volume Oscillator (VOS): Makes use of the difference between two moving averages of volume to determine if the overall volume trend is increasing or decreasing. 52. Volume Rate of Change (VROC): Displays the ROC of the security's volume. 53. Williams Accumulation Distribution (type 1) (WAD1): Tracks the buying pressure and selling pressure. 54. Williams Accumulation Distribution (type 2) (WAD2): Tracks the buying pressure and selling pressure. 55. Williams' %R (%R): Anticipation of market reversals.

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