Tag: technical drawing tools

How Fibonacci Trading Works

How Fibonacci Trading Works

Trading Indicators
Fibonacci trading is a concept in theĀ technical analysis of a security. Fibonacci trading is nothing but identifying support and resistance levels that will most likely trigger a price reversal. The golden mean or phi is a result of the Fibonacci numbers. This proportion divides a measured wave such as price andĀ gives potential levels of support and resistance. These levels signal a high probability of a reversal. It is not always easy to understand the ins and outs of the financial market. This is especially true when the understanding and application of complex analytical methods becomes involved. In this article, we will look at the history and background of Fibonacci numbers and The Golden Ratio. We will then outline three specific money management tips that can help increa
Trading with Speed lines (Speed Resistance Lines)

Trading with Speed lines (Speed Resistance Lines)

Trading Indicators
Speed Resistance Lines or Speed lines for short is a trading concept that was developed by the late Edson Gould who was one of the pioneers as a stock market technician. In 1977, Forbes Magazine described Gould as "the dean of technicians." The speed resistance line concept is based upon the theory that trends can be divided into three equal parts and makes use of trend lines to divide the underlying trend which are then projected into the future to act as support and resistance lines. Although this method is quite reliable and tends to act better than plotting trend lines based on current price action, many traders do not make use of speed lines. Adding this technical analysis to your existing trading arsenal can greatly help the trader understand price action much better and especi...
How to draw trend lines the right way

How to draw trend lines the right way

Trading Indicators
Trend lines form one of the basic blocks of technical analysis and thus are very important to a chartist. Simply put, trend lines are nothing but sloping support and resistance levels and in fact price behaves similarly as it does when approaching a traditional (horizontal) resistance or a support level. Despite its simplicity, trend lines can often turn out to be subjective and thus can confuse a chartist if indeed they have plotted a trend line correctly. The most important aspect of trend lines is that they tend to work on any time frame and in any market which is why they are one of the most popular technical analysis tools for a chartist. It is possible to trade only with trend lines although they are mostly used in conjunction with other methods. A good example of trading based off t...