How to read Candlestick Charts
Charts display information, and different chart types provide different levels of information. The vast majority plot price against time, but can vary in complexity. Below is a line chart which simply records the consecutive closing prices of an instrument for a specific time period: A chart like this will show the observer how price has moved over More...
Double Bottom and Double Top
Double bottom and double top are a chart reversal pattern. In other words, the pattern displayed will signal a reversal of the trend. Below we have explained how to identify these chart reversal patterns. Double More...
Ascending and Descending Triangle Patterns
Triangles are often used in technical analysis to identify a breakout. A triangle can be ascending, descending and symmetric. However, for now we will be talking about ascending and descending triangle patterns. More...
The Trend Is Your Friend (Trend lines, Support and Resistances)
A market is a series of waves. A wave is constructed of peaks and troughs and these are what define the direction of the market which is also known as the trend. A trend of a market can be applied to any financial More...
What is Rate of Change?
Rate of change is a momentum oscillator. It can be measured in percentage or in decimal form. Just like RSI it can be used to identify overbought and oversold levels. The saying ‘the trend is your friend’ More...
Introduction to RSI (Relative Strength Index)
The relative strength index is a momentum oscillator and is the one most used oscillators by traders. The RSI indicator was invented by J. Welles Wilder Jr. The indicator is used to identify overbought levels, oversold More...
An introduction to Fibonacci Retracements
Fibonacci retracements are derived from the Fibonacci sequence (The Rabbit Problem), Fibonacci was an 11th century Italian mathematician and now we use his sequence in financial markets. It is otherwise known as More...
Issues Related to Back Testing
Back testing a trading strategy is the process of evaluating the profitability of a methodology based on returns calculated from historical data. Many portfolio managers use back testing to prove that a strategy More...
Does Systematic Trading Help or Hinder the Financial Markets?
Systematic trading, also known as algorithmic trading is an automated style of trading using computer generated instructions. This type of trading style uses electronic platforms to initiate positions within the More...
More about volatility skews, crunches and smiles
Regular readers will by now be familiar with the fact that one of the most popular options valuation models out there is the Black-Scholes model. Black-Scholes uses a number of inputs to calculate a fair market More...