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Efficient trading rules. The meaning of the graphical analysis
Efficient trading is a key sustainable success profit regardless of the political and economic condition of the market. Trader is always considering the further movements in price while working with the last. The maximum correct forecast of the value movement is not only to save money, but to increase it greatly in geometrical progression. Running ahead we would like to notice that the graphical analysis allows to explore future trend as accurately as possible and it shows the trend which will be completed.
One of the way to solve a problem with dynamic determine in price movements is a graphical analysis as one of the financial instruments. What is it really like, graphical analysis?
Graphical analysis is a comprehensive solution. Firstly it’s a study of the price behavior’ varieties in the chart, which have certain regularities. If you keep them in mind, you will have the opportunity to forecast the further movements in price. That means if we see the movements in chart which we have seen before, then we can forecast where its termination will be with a certain probability.
There is one fundamental truth - a history. Normally it’s repeating and it may be used in your own favour. Most likely the price will reach particular level where was previously. For example, price behavior in the trend channel. Chart movement at the trend channel goes with a precise regularities and gives us the signals both on tendency' speed-up and slowing, or reversal.
Variants of movememt in the trend channel
We would like to notice once again that the trading market is a highly fragile and skittish thing. The price may rise or fall upon changing one of the factors. Political, natural and economic components wield major influence on the price formation.
Therefore any changes of the mentioned factors, whether positive or negative, will affect pricing appropriately. It should be taken into account while trading.
And now we will recur to trend channel, namely to the movements. Put it another way, the chart dynamic always follows the precise regularities. And for this reason it generates appropriate signals for speed-up, slowing or tendency' reversal.
About movements in details:
- Speed-up;
This type of movements occurs at the certain signs. First of all it happens when the price chart can’t back to the trend line, fluctuating nearer and nearer to channel line, and then breaking it and forming a new trend in same direction as previous.
- Tendency reversal in the trend channel;
It’s rather used movement especially at the utterly unstable market. The reversal takes place when the price chart cannot return to a trend line, approaching to a channel line closer and closer; and it breaks the line forming a new reversal tendency. E.g. It was a speed-up firstly, then - definite event and now the tendency is going down.
Work with a trend channel is an important stage of trade. If you work properly with a such kind of instrument, you will have a possibility to receive all necessary results for a profit growth. Work in trend is always giving maximum efficiency and is whereby reducing risks to the minimum.
Also, there is another one efficient instrument besides the work with a trend channel. It’s usage of special elements of technical analysis - mainly the patterns.
Technical analysis patterns - is a definitely price behavior in the chart with its own regularities. On this basis You may know where will be the price after the finishing of patterns formation.
The process of technical analysis patterns starts in trend formation. Such instruments of technical analysis often provide information which allows to enter the deal at best and benefit. The patterns of technical analysis may be as follows:
- The element of trend continuation;
This pattern is showing that the movement is continuing and most probably it will go up after definite market pause. Continuation pattern is a triangle, a pennant and a flag.
- Reversal pattern;
This technical analysis element represents a price behavior. It shows the trend will be completed in the nearest future and a new one will be formed. Reversal pattern is a double bottom and a triple bottom, and also a head-and-shoulders and a diamond.
Reversal patterns may give us a signal both inside of the trend and at the end. The big benefit of the patterns of technical analysis is a great possibility to estimate a potential movement and to use this opportunity. Whereby the trader is receiving the most currently important information on the deal while using such instruments as the patterns of technical analysis. This information will allow you to enter the deal at best and benefit. Taking into account all the above mentioned aspects, the success in trading will be assured. The correct interpretation of the trends and the patterns of technical analysis will allow you to set the currently important trend in time and to earn a capital on it.
