The process of analyzing current and historical data to determine future trends. Stock analysts use various forecasting methods to determine future stock price movements, earnings, etc. Economists use forecasting techniques in order to determine future economic trends.
A group of charts that provide price and volume activity together on one data point over a specified time frame. Footprint charts, provided by MarketDelta, attempt to provide traders with increased price transparency and a clearer picture of market activity, similar to that of a level II quote or depth-of-market order book.There are several types of Footprint charts: Footprint Profile - Shows traders the volume at each price through a vertical histogram, in addition to the regular Footprint bars. The Footprint Profile allows traders to see at what prices liquidity is pooling. Bid/Ask Footprint - Adds color to the real-time volume for easier visualization of buyers and sellers probing the bid or ask. Using the Bid/Ask Footprint, traders can see whether it is the buyers or the sellers influencing a price move. Delta Footprint - Displays the net difference between volume initiated by buyers and volume initiated by sellers at each price. The Delta Footprint is used by traders to help confirm that a price trend has started and will continue. Volume Footprint - Different from a volume histogram on traditional charts, the Volume Footprint segments volume not only by time, but by price as well. This chart is meant to help traders determine points of capitulation. The goal of the Footprint charts is to provide both volume and price data to the trader in one data point so that the eyes need to focus in only one place. It also allows traders to see "within" the price bar to provide more transparency over a traditional chart.Footprint charts are available through monthly subscriptions with MarketDelta in addition to requiring a data feed from a participating vendor.
A technical charting pattern that looks like a flag with a mast on either side. Flags result from price fluctuations within a narrow range and mark a consolidation before the previous move resumes. Likewise, "pennant" formations are usually treated like flag formations because they are very similar in appearance, tend to show up at the same place in an existing trend, and have the same volume and measuring criteria. Flags and pennants are among the most reliable of continuation patterns and only rarely produce a trend reversal. The only difference between the two patterns is that a flag resembles a parallelogram (or rectangle) marked by two parallel trend lines that tend to slope against the prevailing trend. The pennant, however, is identified by two converging trend lines and more horizontal which resembles a small symmetrical triangle. The important thing to remember is that they are both characterized by diminishing trade volume and though different, the measuring implications are the same for both patterns as demonstrated in the above illustration.
Fine tuning refers to the process of making small modifications to improve or optimize the outcome. Generally, fine tuning seeks to increase the effectiveness or efficiency of a process or function. Fine tuning can be accomplished through a variety of functions, the methodology of which depends on the process being optimized. Fine tuning can be applied to a variety of processes or functions. In trading, for example, trading systems can be fine tuned, or optimized, to determine the set of variables that would result in the best theoretical outcome. The same type of procedure can be applied to economic models to predict the behavioral patterns of society.
Rules that attempt to guide investors towards buying and selling patterns that will be the most profitable. Filter rules are created from analyzing the historical price trends of a security. Evidence has suggested that filter rules are rarely successful in creating profits for the investor.
A principle that predicts that, before the observed trend continues forward, a price correction of approximately 1/2 to 2/3 of the change in price will occur. Also known as a "one-half retracement," this correction is considered to be the normal course of uptrends as investors are initially weary and taking some profits.
An indicator used by technical traders to identify periods in which the price of an asset will experience a significant amount of movement. This charting technique consists of a series of vertical lines that correspond to the sequence of numbers known as Fibonacci numbers (1, 2, 3, 5, 8, 13, 21, 34, etc.). once a trader chooses a starting position (most commonly following a major move) on the chart, a vertical line is placed on every subsequent day that corresponds to the position in the Fibonacci number sequence. Fibonacci numbers are a sequence of numbers where each successive number is the sum of the two previous numbers. For reasons unknown, these numbers play an important role in determining relative areas where the prices of financial assets experience large price moves or change direction. The four popular Fibonacci studies are arcs, fans, retracements and time zones.
In technical analysis, it is a complex price pattern based on Fibonacci numbers/ratios. It is used to determine buy and sell signals by measuring price retracements of a stock's up and down movement in stock price. Source: www.harmonictrader.com The above Gartley example shows an uptrend XA with a price reversal at A. Using Fibonacci ratios, the retracement AB should be 61.8% of the price range A minus X, as shown by line XB. At B, the price reverses again. Ideally, retracement BC should be between 61.8% and 78.6% of the AB price range, not the length of the lines, and is shown along the line AC. At C, the price again reverses with retracement CD between 127% and 161.8% of the range BC and is shown along the line BD. Price D is the point to buy/sell (bullish/bearish Gartley pattern) as the price is about to increase/decrease.