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Technical Analysis in Stock Trading

Current stock market trading demands a lot of understanding to ensure that the trader does not end up risking his investments. Interest in stock market trading has grown in the leaps and bounds, there is a lack of proper analysis to reduce the risk percentage. Trading without any expert guidance and proper analysis is more than a gamble and adds a huge risk to the investor. There are a lot of professional trading bodies out there in the market who assist and provide the consulting for any market investor; in the background they use data analytics techniques shaped over decades and advice investors reducing the risk. This share and stock related analytics is called Market Technical Analytics.

Technical analysis is a method of evaluating securities by analyzing the statistics generated by market activity, such as past prices and volume. First cases of Technical analysis were developed by Homma Munehisa during early 18th century in Japan and it was the very first of candlestick techniques, this technique is still under utilization today. With the advent of information age and the standardization across the globe of the stock market data as OHLC, there have been numerous decision support systems that have been attempted and built. Today there are many sophisticated software packages intended to make the OHLC data into into graphics and analytics output.

OHLC Chart:


In the Information Technology domain data analytics using Business intelligence concepts and tools have reshaped the entire landscape, there are better products, better services, best of breed competition negators thanks to this analytics. In the financial market analysis however there is no magic bullet and there is a heavy dependency built over human resources as consultants and analysts.
Moving away from the comprehension basics, time we look at the solution sets available and address the market needs.

Types of Analysis:

There are two distinct analysis foundations the Technical analysis and fundamental analysis. Technical analysis is used for a trade, whereas fundamental analysis is used to make an investment. Fundamental analysis of a business involves analyzing its financial statements, organizations management and competitive advantages, its competitors and markets. Technical analysis is the forecasting of market prices by means of analysis of data generated by the process of trading.

Understanding OHLC:

Open-High-Low-Close charts are widely used in the stock trading market, they are highly useful in analyzing the variations in the stock over a period of time. The OHLC provides the data volume and helps identify the Short-, Mid- and Long-Term Trend, and Volume predicts Market Trend Reversals. There are a host of analytic logics and rules that can be applied over these data stacks to help in decision support and render predictive analytics.

How a Technical Analysis software helps?

A comprehensive technical analysis application helps reduce the complexities and reduces risks to almost 98%; this risk assessment and protecting insulates the users against any bear slugs. Today in this space there are many players and only few offer a comprehensive solutions, so how do we evaluate and identify these? well.. there is no straight answer. However there are some best practices that needs to be bundled with these application, the analytics and logics, the charting systems with multi referenceability and factoring, etc., OHLC based analytics will always have the earlier system predicted trend along with the actual trend and more less the deviation the higher the value. The following are some of the analytics components that ought to be present in the applications like Candlestick patterns, Elliott waves, Darvas Box Strategy, MACD, GAP, GANN, EOD & Intraday modes, Line Studies, etc.,

Jesu Valiant

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Valuation – The Worth of an Idea

November 13, 2010 Leave a comment

Entrepreneurs have a steady stream of thought and they keep generating ideas. There is a lot of work however with these idea machines as they need to develop the capability to sift through these ideas and freeze in over the opportunities. Opportunities are best described as the value generated for which there can be a given financial transaction made; with repeatability and room for enhancing the value. The opportunity should offer a good yield and capable of generating revenue that’s more than the unified expense for the opportunity.

Core Value: If the opportunity is long sustaining and if business can exploit the platform and evolve better profitability, the more comprehensive the solution is. The market need to see ‘value’ in the solution, the value need to be visible when viewed across varied perspectives. When the market scans for a value stack in a solution, the strength of the solution should excite the prospects. The solution stack should be a ‘Fit Gap’ over needs and when evaluated from an internal and an external perspective; internally the solution should address minimal investment, expanding existing capabilities over technology, operations, resources. Externally it needs to address needs of the market at large as a bundle.

Evaluation: The value of the idea and the impending solution can be evaluated by performing
1. Market centric Valuation – taking into consideration the Market Need + Solution Fit + Value Derivations.
2. Technical Feasibility Study of the solution – Performing a Technical feasibility study scrutinizes the need for the technology indulgence of the idea before its maturity and during market adoption, the ease + the scalability + the interops + simplifications, all counts.
3. Commercial Capability study – Evaluating the commercials will be done over two perspectives, the internal returns over expenses, ease of formulation, leveraging of existing business and the markets value for purchase scaling up performances or driving optimizations.
4. Competition Analysis – Positioning and Strategies – Complete landscape analysis over competition + Postioning + Market differentiator services offering be performed to ensure that the best strategy is drafted.

Jesu Valiant

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