How do I Learn Stocks Technical Analysis? 6/23/13

I was talking to an associate of mine. We had hit a decent trade on TAN that I wrote about previously. He asked me if I could explain how I knew to get into TAN when I did. This touches on the very basis of this blog. How do I learn technical analysis so that I can use it to manage my own money?

Part of the reason I started this blog was to be able to help map out a path for others who might be interested in self-sufficiency in managing money. Technical analysis is all about stock charts and using indicators based on price and/or volume to determine whether we should enter or exit a stock. This applies to stocks, stock derivatives like options and also to commodities and futures.

First step: Go buy a book like mentioned in my resources section… “Technical Analysis from A-Z” by Steve Achelis. You can download a free copy from Equis’ website but I recommend buying the book and reading it cover to cover and taking notes while reading it. Here is what is amazing. The price at Amazon is as low as $0.83 + shipping!! That is truly amazing. Here is the link to buy it (and I don’t make a cent of this)

http://www.amazon.com/gp/offer-listing/1557388164/ref=tmm_hrd_new_olp_0?ie=UTF8&condition=new

Get the book and read it. I still use the first edition with the black and red hard cover. I have read it several times.

Next step: Buy a magazine like “Technical Analysis of Stocks & Commodities”. Here is link to what the cover of the magazine looks like. You can pick up an issue at the nearest major book store near you.

http://www.traders.com/index.php/sac-magazine/current-contents

This magazine is for traders, want-to-be-traders and anyone who wants to understand stocks technical analysis better. I used to have a 5 year subscription and don’t subscribe to it anymore; but it was very helpful for me to read the articles and starting to understand the language used and indicators in this field.

Third step: You will need access to good software. You will want to start with something free. I would have recommended Metastock a few years back and still recommend the end-of-day software on the older versions but cannot in good faith recommend the latest Metastock 12. Reuters bought Metastock from Steve Achelis and seems to have changed direction. I love Metastock 11 but they have cut many of us down at the knees with the latest version. Instead of focusing on developing Metastock for the iPad and other mobile platforms, or developing it for direct on-line trading with experts using a brokerage partner, they have configured it to sell data – which I suppose is Reuters main interest.

I suggest you start with a neutral site like Stock Charts.

http://stockcharts.com/freecharts/

You will want to research and find the one free software that suits you best. I admit I like Metastock but it costs money, takes time to learn, and they do not take input from their users and seem to be going in the wrong direction in the future. Long term I plan to probably just use Thinkorswim charting software that comes with the brokerage platform. Here is their home page.

https://www.thinkorswim.com/tos/displayPage.tos?webpage=main&layout=homeLayout

They are now part of TD Ameritrade, which is a very reputable company. The download tab will allow you to download software free. You can use a paper money account. Not sure if you need to open a real money account to use their software but even if you do open a real money account with them, they let you use paper money account to trade with real-time data and see how you do without putting money on the line initially.

This is enough for starters… this is how my journey got started. I had no one to advise me on direction to take to learn, so I can now lay out a path for others to follow given I have self-taught myself, learned from my fiends at Mcubed and then later taken classes on options.

My current position in the markets is all cash. Bond funds, commodities like gold and silver, stocks, emerging markets, most funds all have down signals on them. I cannot predict how long it will stay this way but unless you trade inverse funds or put options or futures, it is better to sit out. Only long signals are on inverse funds.