StudentShare
Contact Us
Sign In / Sign Up for FREE
Search
Go to advanced search...
Free

Trading and Technical Analysis - Assignment Example

Cite this document
Summary
This assignment discusses the concept of technical analysis which involves the analysis of the market to understand the various factors causing changes in the prices and enables investors to make an investment decision and provides assistance to investors to make informed decisions…
Download full paper File format: .doc, available for editing
GRAB THE BEST PAPER97.8% of users find it useful
Trading and Technical Analysis
Read Text Preview

Extract of sample "Trading and Technical Analysis"

Trading and Technical Analysis Trading and Technical Analysis Technical analysis involves theanalysis of the market to understand the various factors causing changes in the prices. This analysis enables investors to make investment decision. The analysis provides assistance to investors to make informed decisions regarding the future trends within the market, which they are trading. The analysis is undertaken through making an evaluation of statistical information regarding market activities(Aronson, 2011).

The analysis utilises historical market information and volume data in making predictions of the anticipated market trends in the future. The analysis is based on the assumption that market trends commonly repeat themselves over a period of time, making historical information become increasingly significant in the analysis. When making purchases in trading deposits must be made in full amount before a transaction can be completed. Additional funds can however be added if the presented funds are not enough for the transaction.

Additional fund a must be added within seven days of the trading period. Amounts deposited after the trading period cannot be accepted in undertaking the transaction. Uniform comparison refers to the comparison of markets through the utilisation of fundamental and technical analyses. This involves the utilisation of similar data in making financial decisions. Technical analysis enables an individual to make purchasing decisions while the long-term investment decisions are made through the application of fundamental economic analysis(Gregoriou, 2010).

A DK notice describes a terminology utilised by traders in describing a comparison of confirmation of transactions. This notice is sent to a party when one party receives a confirmation which it does not recognise. This notice is commonly utilised by the party with insufficient information in seeking to be provided with the information. The notice is settled by provision of the requested information. The Moving Average Convergence/divergence (MACD) refers to an indicator of technical analysis utilised in determining various elements defining the trend of market prices.

The calculation of the values utilises historical information regarding the closing prices on stocks. The approach is utilised in analysing price shifts over a specified duration of time. The data involves making comparison of the average prices for a period of time, hence enabling traders to make investment decisions based on the historical analysis of prices, within the stock market(Chen, 2010). The moving averages are utilised in highlighting the most current price changes, and the MACD line is utilised to gauge the trend of the stock prices.

The 50 day moving average for 3M Company is 132.5 with a change of 0.07% on the stock prices. The moving average remains a fundamental indicator of making comparison between two moving averages presented within a financial report. The company has a positive MACD which is an indication of fast EMA trending above the slow EMA. This has been the trend for the last 50 days and the stock of the company appears to be increasingly stable. The fast EMA has not trended below the slow EMA. The MACD histogram for the company has not dropped below the centre line hence the company stocks has remains above the centre line.

According to the MACD technical analysis of the company the best investment strategy on the short-term for the company would be buy the company stock. Selling these stocks on the long-term investment would also not be a good investment option. Order would be limited according to the percentage of risk being conducted to ensure relativity. References Aronson, D. (2011). Evidence-Based Technical Analysis: Applying the Scientific Method and Statistical Inference to Trading Signals (p. 544). New Jersey: John Wiley & Sons. Chen, J. (2010).

Essentials of Technical Analysis for Financial Markets. New Jersey: John Wiley & Sons. Gregoriou, G. N. (2010). Stock Market Volatility. New York: Taylor & Francis. 

Read More
Cite this document
  • APA
  • MLA
  • CHICAGO
(“Trading and Technical Analysis Assignment Example | Topics and Well Written Essays - 500 words”, n.d.)
Retrieved from https://studentshare.org/finance-accounting/1640049-trading-and-technical-analysis
(Trading and Technical Analysis Assignment Example | Topics and Well Written Essays - 500 Words)
https://studentshare.org/finance-accounting/1640049-trading-and-technical-analysis.
“Trading and Technical Analysis Assignment Example | Topics and Well Written Essays - 500 Words”, n.d. https://studentshare.org/finance-accounting/1640049-trading-and-technical-analysis.
  • Cited: 0 times

CHECK THESE SAMPLES OF Trading and Technical Analysis

Technical Analysis in Relation To a Security or Index of Currency

Name Instructor Task Date technical analysis In Relation To a Security or Index of Currency Introduction technical analysis focuses on the financial instrument data in the market with the intention of forecasting upcoming price adjustments.... The technical analysis takes in account only price action of the market trends that makes it simpler and easy for traders in the Forex exchange; therefore, it is a significant to analyze shorter-term price movements....
3 Pages (750 words) Research Paper

The Concept and the Problem of Insider Trading

n the final analysis, illegal insider trading is an abuse of power and an abuse of trust.... This essay “Insider trading” addresses the concept and the problem of insider trading.... Insider trading is considered an issue of immense importance to the business and legal communities.... hellip; The author states that it is considered so important because this type of security transaction, insider trading, can potentially harm individual investors, industries, and a country's business reputation....
2 Pages (500 words) Essay

Random Walk Theory of Share Price Movements

This meant that a trader with specialized information about future events could profit from the monopolistic access to information, but that fundamental and technical analysts who rely on past information should not expect to have speculative gains.... Specifically, an analysis of share price movement revealed little serial correlation, with the conclusion that there was very little predictability of movements in share prices for a week ahead without extraneous information....
3 Pages (750 words) Essay

The Australian Stock Exchange

Overall, this paper about the basic principles three different types of technical analysis, and response given to the statement, is written well.... The first part begins with a clear, accurate and self explanatory definition to technical analysis.... After deploying a relevant quotation from Pring that explains some additional facts about technical analysis, the paper focuses on the basic principles used by technical analysts.... Here it is clear that one needs to discuss three different types of charts used in technical analysis....
3 Pages (750 words) Essay

Hedging as a Stock Trading Strategy

The option of stock analysis is resolute by the investors faith in the different prototypes for "how the stock market works".... I have learnt some of the technical methods which are useful when trading in stocks and shares.... The most common one is using effective stock trading strategies to find out which are the stocks that can be bought at a particular time, when to sell them and to protect the investment.... Needless to say,… The better of all the available stock trading strategy for newbie's is discussed. Hedging is a better stock trading strategies when the investors' aim is capital protection....
1 Pages (250 words) Essay

Expression in architecture

The profession of mechanical engineering revolves around the design, manufacture, analysis, and maintenance of mechanical systems (David & Madsen, 2011).... Mechanical engineering can get… Some of the major sub disciplines of mechanical engineering include; structural analysis, mechatronics and robotics, mechanics, design and drafting, thermodynamics and thermo-science (David & Madsen, 2011). My profession as a mechanical engineer Drafting also gets referred to as technical drawing....
5 Pages (1250 words) Term Paper

Security Investment Analysis

Both the technical analysis and fundamental analysis aims to earn a good return to investor but their approaches are different.... The former analyses the share prices on the basis of economic analysis, industry analysis and then company analysis.... The technical analyst mainly follows the stock price movement of security market and takes advantage from short term price fluctuations.... If there is an uptrend in the movement of stock prices, the technical investor may buy the scrip....
9 Pages (2250 words) Essay

Evaluation of Returns Predictability

In other words, it is a portfolio's… technical analysis is a methodology used in security analysis that uses statistics, such as prices and volume that have been generated by the market in the past.... Specifically, Park and Irwin (2004) suggest This paper has two sections; in the first section it discusses empirical evidence on the predictability of excess of returns by the technical analysis method, the second section is devoted to evaluating whether return predictability is a good test for market efficiency....
7 Pages (1750 words) Coursework
sponsored ads
We use cookies to create the best experience for you. Keep on browsing if you are OK with that, or find out how to manage cookies.
Contact Us