Technical analysis of securities and how to conduct it. Technical analysis of securities and how to conduct it Technical or fundamental analysis

Hello, dear readers of the blog site! This article will introduce you to technical analysis— the most effective tool for predicting price behavior.

You will learn why the vast majority of traders use technical analysis in stock trading. Technical analysis — a set of tools for predicting price changes based on historical data. For analysis, indicators, various graphical constructions on the chart and volume are used.

The basic postulate of technical analysis is: the price takes everything into account. All economic and macroeconomic events, market expectations and any other news are already included in the price. At first, it is difficult and uncomfortable for beginners to come to terms with this postulate, but it is so. That is why, in technical analysis, work is carried out exclusively with the price chart, without taking into account any fundamental and economic data.

The main emphasis when predicting the behavior of an asset in the future is on visual work with the price chart. This is connected with another postulate: history repeats itself.

Traders analyze the chart and look for repeating patterns that can be used to predict where the price will go next.

Depending on the tools and methods used, technical analysis can be divided into subgroups:

• candlestick analysis;
• figure analysis;
• analysis using indicators;
• wave analysis;
• volume analysis.

All subgroups can act separately or complement each other. It is not uncommon to see traders using different analysis methods at the same time.

Candlestick analysis

It is called candlestick because the chart is depicted in the form of Japanese candles. This method was invented by Japanese rice traders in the 18th and 19th centuries. There are many candlestick patterns that can tell a trader about an upcoming market reversal or continuation of movement.

For example, there is this model:

Notice how, after non-stop growth, a black candle appears with a long upper shadow. This model warns the trader that the buyer’s strength is running out, and it’s time to take a closer look at sales. The market begins to fall and completely covers the previous growth.

Figure Analysis

They have very good predictive power for future price behavior. Using them you can find out quite accurately where the price will go, which is very important when closing a transaction.

Example of a descending triangle pattern:

Descending triangle figure

Positions when trading using technical analysis figures are opened after a breakout. We strongly recommend that you pay attention to the pattern analysis. With their help you can trade very successfully.

To identify shapes, you can use a program that will detect them automatically. This program is called . Install it and it will give you signals when there are good times to open a trade.

Price analysis using indicators

This analysis uses technical indicators that are available in every trading terminal. In the most famous trading platform, indicators are very conveniently divided into groups:

Groups of indicators in the MetaTrader trading terminal

The screenshot shows indicators from different groups. The role of a trend indicator is , the oscillator is , and volumes are also presented.

Beginners make a big mistake when they use too many indicators on the chart. This looks terrifying :)

Agree that it is very difficult to analyze a chart when the price is not visible due to such an abundance of indicators. This comes from uncertainty in trading. Most beginners think that the more indicators on the chart, the more accurately they can predict the price. This is wrong.

A large number of indicators significantly complicates visual analysis. All indicators contradict each other, and there is nothing left in the head but porridge. We recommend that you do not use too many indicators. One from each group is sufficient.

Wave analysis

A separate group are the so-called “wave traders” - traders who use the Elliott wave theory as the basis of their analysis. According to this theory, the market moves in cycles and has a certain wave structure that always repeats itself.

Elliott waves

The main difficulty of this type of analysis is that it is difficult for a trader to determine which wave the market is in at the moment. The theory of waves is quite complex and involves different interpretations.

Using volume analysis, traders try to determine the prices at which the volumes of large trading participants passed. There are different types of volume analysis, but the most popular is cluster analysis.

Volumes are collected into clusters according to certain configurable parameters. As you have already noticed, in this type of analysis, volumes are displayed not in the usual vertical form, but in a horizontal one.

Which analysis to choose is up to you, but we recommend studying everything and then deciding what is closer to you.

If you have questions, welcome to the comments :)

Good luck in trading!

Leading broker in the FOREX market -

Technical analysis of the securities market is a price forecasting system based on information obtained as a result of market trading. In contrast, based on the study of the production activities of an enterprise, it is based technical analysis lies in identifying and studying certain patterns in the movement of the quote chart.

• In other words, when using technical analysis, a trader performing a trading operation is guided only by a graphical image, while he may be completely unfamiliar with the activities of the company whose securities he is trading.

Technical analysis of stocks is relevant for short-term trading of securities.

Technical analysis of the investment properties of securities uses many tools, but the main factors on which it depends are trading volume, price dynamics and historical data.

The theory is built on three basic rules:

• The movement has already taken into account various factors influencing price changes. Therefore, it makes no sense to separately study the dependence of prices on political or economic news.
• Price changes do not occur randomly, but are influenced by certain trends. That is, by dividing the chart into time intervals, you can see the price change in one direction.
• Market cyclicality. When certain situations arise, the reaction of market participants is always the same. Therefore, when they reappear, similar graphical patterns appear on the quote chart, recognizing which you can predict further price movements.

To evaluate information, technical analysis of the stock market has several methods. They are based on mathematical calculations () and graphic drawings (). And the very first tool for forecasting prices was Japanese method Keisen. It is successfully used to this day, under the name Japanese candles.

Japanese candlesticks as a method of stock price analysis

Japanese candlesticks are a type of chart that is used in technical analysis of the stock market. It consists of rectangular figures - candles, each of which corresponds to a specific time interval -

• if the chart is on a minute timeframe (M1), then each candle has an interval of a minute
• if this is a graph M5- then the candle has an interval of 5 minutes

A candle consists of two elements - body And shadows. The body boundaries show the opening and closing price levels for a given time period. And the boundaries of the upper and lower shadows show the maximum and minimum price for the same interval.

There are two types of candles - bullishAndbearish. A bullish candle reflects an increase in prices over a specified interval and its body is not shaded. On color charts, a rising candlestick is green and a falling candlestick is red.

• At the ascendant (bullish) candles, the upper boundary of the body indicates the closing price, and the lower opening price.
• Descending (bearish) the candlestick characterizes a fall in price and its body is painted in a dark color. On such a candle, the upper border of the body indicates the opening price, and the lower border indicates the closing price.

Price forecasting using Japanese candles is based on an analysis of the shape of individual candles, as well as their combinations. There are quite a few different candles that have names and give their own signals about a possible change in the market.

Technical analysis of the stock market is easy to do using candlestick patterns - all professional traders as market participants see this and act accordingly.

The most accurate forecast is provided by candles " hammer" And " hanged" They signal a chart reversal. Both candles have a small body and a long shadow. “” is located at the bottom of the chart and indicates an upward trend reversal, and “ Hanged" - at the top of the chart, indicates a downward trend reversal.

In addition to the “hammer” and “hanging man”, the main types of Japanese candlesticks include the “Morning Star”, “Evening Star”, “Harami”, various “Doji”, which also signal a reversal, and “Marubozu” - a candle, the appearance of which signals the continuation of the trend .

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Good afternoon, trading blog readers. is performed every time we open a position. This condition is very important because when closing a transaction, we look exclusively at the price movement of the stock we are trading. And since opening a position is precisely the moment when our money is at risk, adequate and thorough analysis of the stock market is the most important component of your success in trading.

Like Sherlock Holmes, we can move from top to bottom or from bottom to top. In the first case, the state of the economy of the country (recession or growth) in which you are trading is first determined to get a general idea of ​​​​the direction of trading. Next, individual sectors and industries are analyzed to identify those that pull the market along with them, like a locomotive. And, in the end, we need to find leading stocks that will directly become candidates for buying or selling.

If you trade the US stock market, where there is a wide range of instruments, then this approach will suit you best. When trading takes place in a market with a limited choice, for example the Russian one, where there are few truly liquid instruments, then you need to analyze from the bottom up. In other words, we look at a stock first and then compare its performance to the rest of the market to determine the direction of the trade.

Now let's look at an example at swing trading strategies, which is presented on this site. I do the analysis from top to bottom:

• I use the S&P 500 stock index (more precisely, the ETF on it SPY) to determine the general state of the market: recession or growth. Stock trading is carried out only in the direction of the main trend. Ideally, the directions of movement of different indices, for example, the S&P 500, Dow and Nasdaq, should coincide
• To be honest, I do not conduct analysis by sectors and industries, since when filtering stocks, I only select those that are in trend. Therefore, this stage seems to happen automatically for me.
• Leading stocks must outperform the market to improve the reward-to-risk ratio. To do this, read " How to pick stocks that beat the S&P 500" And " Another way to determine trend strength».

It's that simple! First, we look at the stock market as a whole, and then we analyze it bit by bit, as if under a magnifying glass. The main task: to choose the best stocks for trading among the many presented.

Methods of stock market analysis

Traders and investors approach stock trading differently, which is why they use different methods for analysis. For example, an active trader spends more time on graphics, and an investor spends more time on numbers, indicators and all kinds of coefficients. But the scheme and main task are the same for everyone, as we discussed a little above.

So, what methods exist for analyzing the stock market:

• Fundamental Analysis
• Technical analysis
• Analysis of stock news

Now let's briefly go through them.

Fundamental Analysis

Behind every stock is a company or business. It is this that is subject to fundamental analysis. Investors believe that the value of a business is equal to the price of the shares. It’s just that, due to the increased emotionality of the market, they often differ. Because of this, the investor looks for stocks that are cheaper than the business, expecting them to increase in value.

What should you pay attention to when doing this type of stock market analysis? This is the country's GDP, the company's net income, the value of assets and liabilities, cash flow, the number of dividends and much more. That is, it is important to understand that an investor evaluates a business based on various ratios and figures and compares his assessment with the current stock price. If the result is positive, he considers this company for purchase.

Technical analysis

An active trader is interested in supply and demand, what is moving the price of a stock at a given moment, and technical analysis helps him with this. The Dow Theory states that the market takes into account everything: fundamental information, news, and even what will happen in the future. That is, there is no point in poking around in various ratios and figures; you just have to look at the stock chart to make a decision to buy, sell or stay the same.

What should you pay attention to during this type of stock market analysis? First of all, these are price dynamics and trading volume. They are the only objective measures of stocks. Next, traders use all kinds of graphic elements, indicators, etc.

Stock news

No matter what type of stock market analysis you practice, everyone should consider the news. Both the investor and the active trader look at analyst forecasts, company earnings reports, inflation or unemployment rates, and so on. The fact is that stock exchange news has a direct impact on the stock price. If they are not taken into account, this can lead to disastrous results.

To analyze stock prices, we will use the Dow Theory, in which it is necessary to study six basic postulates, with which most analysts are already familiar:

• 1. The price takes everything into account. According to the Dow Theory, any factor that can in one way or another affect supply or demand will invariably be reflected in the price. Regardless of the nature and causes of events, they are instantly taken into account by the market and are reflected in price dynamics.
• 2. There are three types of trends in the market. The Dow's definition of trend is as follows: In an uptrend, each subsequent peak and each subsequent decline is higher than the previous one. That is, an upward trend should take the form of a curve with successively increasing peaks and troughs. Accordingly, with a downward trend, each subsequent peak and decline will be lower than the previous one. This trend definition is still fundamental and serves as the starting point for trend analysis. Dow also identified three categories of trends: primary, secondary and minor. He attached the greatest importance to the primary, or basic. The main trend lasts several years and can be either bullish or bearish. Second-order movements last from several weeks to several months and can go in the opposite direction to the main trend. Third-order movements are oscillations with a period of several days.
• 3. The main trend has three phases. A market trend has three phases. Phase one, or accumulation phase, when the most far-sighted and informed market participants begin to buy first. The second phase occurs when investors using technical methods of following trends join the price rise. Prices are already rising rapidly, and the perception of this market is becoming increasingly optimistic. The trend then enters its third or final phase when the general public gets involved and a media-driven frenzy begins in the market. It is at this stage that those informed investors who bought during the first phase, when no one wanted to buy, begin to “distribute”, that is, to sell when everyone, on the contrary, is trying to buy.
• 4. Indexes must confirm each other. In the original, the Dow meant the industrial and railroad indices. In his opinion, any important signal for an increase or decrease in the exchange rate on the market must pass through the values ​​of both indices. In other words, we can talk about the beginning of an upward trend only if the values ​​of both indices have covered their previous intermediate peaks. If this happens with only one index, then it is too early to talk about an upward trend in the market rate. If the indices show different dynamics, this means that the previous trend is still in effect. Currently, this principle of the Dow theory is expressed in the need to confirm signs of a trend change with additional signals.
• 5. The trading volume should confirm the nature of the trend. Trading volume, according to Dow, is an extremely important factor in confirming signals received from price charts. If the underlying trend is up, volume increases in line with rising prices. Conversely, volume decreases when prices fall. If the main trend is downward, then everything happens exactly the opposite. In this case, a decrease in prices is accompanied by an increase in volume, and during intermediate price increases, the volume decreases. However, it must be noted again that volume is only a secondary indicator. Buy and sell signals, according to the Dow Theory, are based solely on closing prices. Volume indicators have one main purpose - to determine in which direction volume is increasing. And then this information is compared with price dynamics.
• 6. A trend continues until it gives clear signals that it has changed. This position, in fact, underlies all analytical methods of trend following. It means that the trend that started the movement will tend to continue it. Of course, identifying trend reversal signals is not so easy. But analyzing support and resistance levels, price patterns, trend lines, moving averages - all of this, among other technical tools, will help you understand that there is a turning point in the dynamics of the existing trend. And with the help of oscillators, signals that a trend is losing strength can be received even earlier. The likelihood that an existing trend will continue is usually higher than the likelihood that it will change. By following this simple principle, you will be right more often than not.

There are several types of prices in the commodity, capital and currency markets. All of them are published in periodical economic publications daily. These are prices of futures and auction transactions, spot and forward prices for real assets.

For a participant in entrepreneurial activity, it is important to know how prices are determined in exchange contracts, since the pricing system in the latter differs significantly from those used in forms of trade organization.

In order to become an exchange product, a product must meet the following conditions:

by quantity: the quantity of goods is determined in the agreement in natural units of measurement, the actual value of the sale of goods is called lots;

by quality: the quality of the goods in the agreement is determined by standard and technical conditions, terms of the contract, by preliminary inspection of the goods, as well as by samples. An outstanding factor in standardizing the quality of a commodity is the introduction of a base grade as a single measure. It is the criterion by which qualitative characteristics of similar products are given. The price of the base variety is taken to be the most common type of product of that character;

by liquidity: the product must be absolutely liquid, that is, it can be bought and sold at any time;

by mass: a product participating in exchange trading must be non-monopoly, that is, mass

Acceptance of goods and their placement are stipulated by the rules of exchange trading. Members of the exchange offer their goods after their direct inspection by brokers at enterprises or on the basis of samples or descriptions provided. The goods are entered into the accounting book and the broker's "pit" cards only in the case of a guaranteed quantity of goods in the warehouses of the exchange, about which a corresponding note is made, or in the warehouses of the seller. The Avila Exchange Trade Regulation also approves the list of goods that are quoted on the exchange.

The purchase and sale of goods on the exchange consists of an exchange transaction

. Exchange transaction- this is a written document for real goods with established delivery dates. An agreement is considered an exchange agreement if it is concluded between members of the exchange for goods admitted to circulation on the exchange provided, in accordance with the time period and procedure determined. Charter and Rules of exchange trading (an example of an exchange contract for a futures transaction is given in Appendix N).

Agreements registered on the exchange are not subject to notarization, but are approved by the general meeting of the exchange. The contents of the exchange transaction (except for the name of the product, quantity, price, place and strictly the execution) are not subject to disclosure. This information can be provided only at the request of the investigative authorities and the court. The agreement is considered concluded from the moment of its registration on the stock exchange. Only members of the exchange or brokerage have the right to carry out exchange operations.

For the type of exchange commodity, prices are determined depending on the ratio of supply and demand at the moment of exchange trading. The following concepts of price are used on the stock exchange: the price of the seller (supply), the price of the buyer (demand), the price of the exchange agreement, the quotation price.

. Seller's price for a commodity- the price indicated by a participant in exchange trading in a sales application (see Appendix M), as well as named by him during trading in order to stimulate sales

The buyer's price refers to the prices indicated by the buyer in applications (see Appendix N) for purchase, as well as those that he names directly during the auction, when discussing the seller's offer

The price of a stock exchange transaction is the final price of those that were named by the buyer (seller) and recorded by the stock broker

As noted earlier, the price of exchange transactions (exchange goods) is the price at which purchase and sale transactions of large quantities of material and raw materials, industrial and technical products, agricultural products, and consumer goods are carried out on commodity exchanges. This price is formed on the basis of the exchange quotation (supply and demand) and markups or discounts from it depending on the quality of the goods, the distance of the goods from the place of delivery, which are indicated in the exchange contract. The agreement at this price is concluded by the one who first accepted the offer. To complete the operation, three parameters must be fixed: price, amount and delivery time.

The price of exchange transactions is one of the types of free prices, which makes it possible to more fully identify the supply and demand for goods on the scale of the region, country and world market, both at the time of trading and in the future. In countries with market economies, stock exchange prices are regularly published in periodicals and the electronic information network.

Depending on the type of agreements concluded on a commodity exchange, two types of exchange prices are distinguished: prices for real goods and prices for futures, or forward transactions. In turn, prices for real goods are divided into prices for spot (“cash” transactions) and forward contracts.

The price for a spot contract is the price for an available standard product, which is delivered to a certified exchange at the expense of the seller within a week after the transaction is concluded. Payment for this contract must be made within two days after the conclusion of the agreement.

In the practice of foreign market economy, forward contracts occupy a certain place

. Forward contracts- these are contractual obligations of private individuals with over-the-counter turnover for the supply of goods in the future without any official guarantor

The price behind a forward contract is the price for delivery of the commodity at a future date (one, three, six or nine months from now). As with a spot contract, payment for goods must be made within two days after the transaction is concluded. The peculiarity of a forward transaction is the time difference between the conclusion of the transaction and the delivery of the goods to the buyer. Therefore, such transactions are also called agreements with deferred fasting. In the case of a forward transaction, the buyer advances the seller for goods of certain quality characteristics, which he must develop and deliver at a specified time. Thus, an agricultural commodity grower can sign a contract in the fall for the supply of grain of certain standards during the harvest period at a pre-agreed price. Such a forward contract makes it possible to guarantee a favorable price for the buyer, and for the producer to replenish funds for the production process. In addition, the advantage of concluding such agreements is manifested in significant savings in storage costs. In the city of Iru, the formation and development of market relations in Ukraine, the volume of forward transactions will increase. In real commodity trading, forward transactions tend to dominate.

. Futures transactions are concluded between the buyer and seller for the purpose of insurance against a possible increase in prices on the real market. A product can be sold at different prices. System for determining prices in financial. Futures contracts differ significantly from those used in ordinary commercial transactions.

The price for a futures transaction is the price for a standard contract, which provides for the future delivery of certain volumes of a certain type of product of a certain quality characteristic. Futures transactions are standard standard contracts. The price of such a contract is determined at a public auction on exchange trading. Unlike transactions for real goods, futures transactions do not sell real goods, but only an agreement for their possible delivery in a future period. The conclusion of such agreements is carried out not for the purpose of buying or selling a real product, but for insurance against possible unfavorable price changes. Practice shows that the vast majority of futures transactions are fictitious, since only 2% of transactions result in the delivery of goods, and the rest - in payment of the difference in prices. According to a futures transaction, the difference between the price of the contract at the time of its conclusion and the real price prevailing in the market on the day the contract expires is paid by either the buyer or the seller. If during this period the price rises, the seller pays this amount. To do this, he enters into an offset, or counter (opposite) agreement, providing for the purchase of the same batch of goods at a new, now real price at the end of the futures transaction. The buyer also enters into an offset transaction to sell the same batch of goods at a new price and receives the difference. When the price decreases, the opposite happens. At the moment of concluding an offset transaction in futures, the agreement is liquidated and completed.

In order to insure against possible losses due to changes, when implementing contracts for real goods, exchange transactions use hedging - a counter commercial transaction for the sale of goods of the appropriate quality at the appropriate price.

The price of the base grade determines forward transactions concluded for a pre-agreed quantity of goods, the supply agreement of which is an exchange document containing clearly defined responsibilities of the parties to the price. Such transactions are called warrants.

Price trends for goods are judged by prices in warrants

An order to buy or sell a commodity is sent directly to member brokers of the exchange on the trading floor by telephone or fax. A broker member of the exchange may come to the auction with a package of client orders. The customer can accompany his orders with various instructions: indicating the minimum or maximum price, the number of contracts for sale or purchase, instructions for replacing contracts, etc. At the end of the speech, the time of receipt of this document by the broker in the “pit” is indicated. When concluding a transaction, the broker enters in a special form, the code number of your contract, when concluding a transaction, month of delivery, price, volume of goods. This data is immediately transmitted to those present in each “pit”, exchange observers and to the computer accounting system. Price information is displayed on a special display on the trading floor of the exchange, and is also transmitted to other exchanges and through exchange information services - to the media.

Exchange quotations are the outstanding prices of exchange transactions concluded for a standard quantity of a standardized product, provided for by the rules of exchange trading in the exchange “pit” during official hours. Both exchanges. Quoted price - the price determined by the quotation commission of the exchange by analyzing the prices of exchange agreements, sellers' prices, buyers' prices based on uniform criteria and special methods. There are official and non-official quotes.

Official quotations are carried out at the prices of exchange agreements for groups of products of standard quality determined by the exchange with a single delivery basis for each exchange commodity. The process of determining official. The market price quotation provides for an objective assessment of price fluctuations during the exchange day.

According to the market of a certain day for a certain product with a large number of transactions, the quotation price is calculated as the average price of transactions

Market conditions are determined based on three characteristics:

The relationship between supply and demand;

The trend of price movements during the exchange day;

Number of completed transactions

Quotations outside the official (reference) are carried out on the basis of an analysis of prices (demand, supply, agreements) taking into account the quotation commission’s assessment of the supply and demand situation in three directions of the MKAM: at seller prices (quoted offer price), at buyer prices (quoted demand price), according to the typical price on the exchange for a specific period of time for a specific type (group) of goods (quoted exchange price.

The reference or quotation price is not the official or fixed price of the exchange, but only reflects the opinion of the quotation commission about the most typical price

A reference quote can be made based on the results of several exchange trades. These quotes cannot be appealed by members of the exchange and cannot be changed by decision of the exchange committee. Controversial issues arising during the bidding are considered by arbitration commissions.

The official quotation data is notified on the exchange the next day after the auction.

By decision of the quotation commission, the exchange has the right to set maximum levels of price fluctuations for goods that are officially quoted on the exchange, deviation from which provides grounds for termination of trading for a given product.

Of particular note among the exchanges actually operating in Ukraine is the agricultural exchange

. Agricultural Exchange is a type of commodity exchange. It employs the same participants and has the same functions as the commodity exchange. Trade agreements, the procedure for their conclusion and execution, trading techniques, and other issues of the organization and functioning of commodity and agricultural exchanges are largely the same.

Exchange trading in agricultural products as a specific and very important sector of the national economy is carried out in accordance with the rules of exchange trading, approved by order of the Ministry of Agriculture and Food of Ukraine and. Ministry of Finance of Ukraine No. 103/44/62 dated 3041996 rub. This is the main document that regulates the procedure for carrying out exchange operations regarding trading in agricultural products, establishes trading rules for trading participants, officials and employees of the exchange, determines the content of exchange agreements and provides guarantees for their implementation. The rules are mandatory for all exchanges. In addition, exchanges can approve their rules only on the condition that they do not contradict the typical ones. Rules. The rules are developed based on. Law of Ukraine "On Commodity Exchange", other legislative acts.

For each type of agricultural product, prices are determined depending on the ratio of supply and demand at the moment of exchange trading. The agricultural exchange uses the same price concepts as the commodity exchange: seller (supply) price, buyer (demand) price, exchange agreement price, quotation price.

The price level for the purchase of agricultural products and food for state needs should be determined taking into account the weighted average prices based on the results of previous auctions

. Questions and tasks

1. What is the main purpose of the commodity exchange?

2. What is the importance of stock prices in the world economy?

3. What are the requirements for a commodity?

4. What types of exchange prices. Do you know?

5. Describe the procedure for concluding stock exchange transactions

6. What is the difference between official and official quotation?

7. What are the features of the activities of the agricultural exchange in Ukraine?