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DB's site is a good place to start building TA understanding.

http://home.talkcity.com//MoneySt/dbphoenix/DbsBurrow2.htm

From "whats a chart section"
But beyond all this, a chart is a visual representation of buying and selling behavior on the part of investors, not just a tally, and this behavior creates patterns. Thus if you approach this from the viewpoint of psychology and sociology rather than cut-and-dried mathematical models, you'll have a leg up. These patterns do not exist in nature. They are created by the buying and selling dynamic.

Begin by thinking of the market as a giant bazaar. Lots of buyers and sellers, all excitedly negotiating prices until they cramp. If a lot of people are crowded around a particular merchant's stall, he can demand premiums for his goods. If another merchant is getting little or no traffic, he must lower his prices in order to unload his stock. If he's able to manufacture a demand, he can then raise them again. Either that or use whatever demand he creates to unload whatever crap he's selling and move on to something else.


From "Demand & Supply"

All technical indicators are based on price and/or volume behavior, usually both. One might surmise, therefore, that to get at the root of all this, one should study the relationship of price and volume in addition to the proper use of technical indicators. Maybe instead of technical indicators. But you wouldn't be going far enough. Price and volume behavior are further dependent on the relationship between supply and demand. Therefore, in order to make consistently profitable trades/investments over the long haul (perhaps even the short haul), it is absolutely essential that you understand how the relationship between supply and demand affects what happens to your stock. Using technical indicators as a shortcut through this landscape is like trying to drive a car without first understanding the functions of the steering wheel, the brake pedal, and the accelerator.

JR





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These patterns do not exist in nature. They are created by the buying
and selling dynamic.


I think that could be debated. Could debate it a couple of ways. You could argue that this "charting" is in nature. It is the mapping of the psychological crowd behaviour of a "natural" animal - mankind.


Also I have seen literature (can't remember where) that says that these patterns can be recreated with random coin tosses. I haven't tested this out myself though. You could also say that this is in nature.
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Therefore, in order to make consistently profitable trades/investments over the long haul (perhaps even the short haul), it is absolutely essential that you understand how the relationship between supply and demand affects what happens to your stock

I'm trying to get my head around some of these profound statements. Perhaps I have just a simple minded approach but I would have thought that this statement was self evident. To use the buggy whip analogy: if there isn't a market for them then the stock isn't going to rise.
Regards
Harmy
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I think that could be debated

Yep, I think you could be right.

JR
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I'm trying to get my head around some of these profound statements

DB, explains in more detail the relationships between supply & demand in the below link.I don't agree with everything DB states, however his site offers an introduction to concepts that I've found to be sound.

http://home.talkcity.com//MoneySt/dbphoenix/Demand.htm

Accumulation is the process whereby a quantity of stock is acquired at the lowest possible price. It is not throwing money at a rocket or even a breakout. It is a subtle, sophisticated, and sly effort to amass a stake that is large enough to not only make the next phase (the "markup" phase) worthwhile, but also possible. The markup phase becomes possible because the number of shares available for trade has been quietly reduced, and when the demand for those shares increases, the prices charged for them can be increased as well. In other words, as with diamonds, there may be a lot of them, but they're released into the marketplace in controlled amounts in order to keep the price artificially inflated (stocks, like diamonds, are worth only what people are willing to pay for them).

The accumulation process takes place in what is called a "congestion area", a sideways movement of the stock in which price shows no inclination to take off either up or down and is accompanied by consistently low volume (see Bases). The low volume part is important, as low volume levels are characteristic of indecision (if people were confident in a decision to buy or sell, they'd do so, and in big lots too; when volume is high, everybody's being decisive--they just don't necessarily agree on whether the stock should be propelled higher or driven lower). Low volume can occur in congestion areas that are part of uptrends or it can occur in congestion areas that are part of downtrends. In either case, the determining characteristic of the pattern as it relates to accumulation or distribution is the indecision within the pattern itself as to direction, not necessarily the prior direction, for one can never be really sure in which direction the stock is going to break out except in hindsight.


JR


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Mind Games Section
http://home.talkcity.com//MoneySt/dbphoenix/MindGame.htm

By "type of investor" I don't mean short-term or long-term or agressive. How one characterizes himself as an investor is a direct result of and is inextricably connected to the kind of person he is. A person who can't tolerate risk in real-life sure won't be able to tolerate it well as a way of approaching the markets. A person who is rightfully proud of his intelligence and skill and the quality of his judgement isn't likely to find happiness with a mechanical strategy that prevents him from using any of that. A person who is fearful, lacks self-confidence, is subject to self-doubt, fits of anger, feelings of envy or even greed will find the going much rougher than the individual who's gone through some serious self-examination and is ready to meet the market on its terms. Are you thoughful or impulsive? Conservative or wild? Are you patient or do you have a short fuse? When confronted with an obstacle, do you immediately become frustrated or do you begin to evaluate various ways of getting around, over, or through the obstacle? Are you methodical or do you act according to your "gut feeling"? Are you focused? Easily distracted? Do you walk fast or slow? Do you put your socks in the laundry hamper or do you leave them where they lie?

JR
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JR
Thanks for the link !!

The accumulation process takes place in what is called a "congestion area", a sideways movement of the stock in which price shows no inclination to take off either up or down and is accompanied by consistently low volume (see Bases). The low volume part is important, as low volume levels are characteristic of indecision.....

I found this to be interesting because although I have noticed the sideways movement in a number of stocks I hadn't realised why.
Looks like I've got some reading ahead of me.
Regards
harmy
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