Technical Analysis practically deals with the behavior of securities price and how to utilize that information to make money while avoiding loses.

Things to remember:

• Always be sensitive to risk.
• Controlling losses is more important than gain.
• Always have an entry and exit plan.
• Do not let greed take over.

The table below shows how much you need to gain to recover for losses:

Loss      Gain Needed to Recover Loss
10%      11.1%
20%      25.0%
30%      42.9%
40%      66.7%
50%      100.0%
60%      150.0%
75%      300.0%


Buy Securities only when in an uptrend, avoid buying in a downtrend (wait for a reversal signal).

Notes on Dow:

• Securities prices move in trends much of the time.
• Trends can be identified with patterns that you see repeatedly and with support and resistance trendlines.
• Primary trends are changed by secondary movements (retracements) in the opposite direction of the primary trend.
• Trends remain in place until some major event comes along to stop them.

 

No single technique is 100% effective.

To Trade well is a skill that takes training, practice, and benefiting from mistakes.