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2 The Forbidden Book A Stock Trading Technical Analysis Guide Gandakoh 12/24/20

2 The Forbidden Book A Stock Trading Technical Analysis Guide Gandakoh 12/24/2020 Traders Den PH. December 2020 3 This book is dedicated to all Filipinos who want to become stock traders. Learning Technical Analysis is and will always be for free. This e-book is a property of Traders Den PH. This is NOT for SALE. 4 TABLE OF CONTENTS Title Page………………………………………………………………………………………. 2 Dedication………………………………………………………………………………………. 3 Table of Contents…………………………………………………….………………………. 4 What is Technical Analysis? .……………………………………………………………. 5 Chart...……………………………………………………………………….…………. 6 What is Chart?………….………………………………………………………..…… 8 Technical analysis vs. Fundamental Analysis ….………………………….… 12 The Candlesticks……………………………………………….…………………… 13 Wicks……………………………………………………………………………. 15 Doji ……………………………………………………………………………. 16 Special Book…………………………………………………………………………… 17 Market Cycle...………………………………………….…………………………… 18 Stock Market Trends …………………………………………………………...…… 26 Technical Indicators ………………………………………………………….……………. 33 Moving Averages …………………………………………………………… 33 Relative Strength Index …………………………………………………… 38 Divergence …………………………………………………………………… 47 Support and Resistance……………………………………….……………. 60 Fibonacci ……………………………………………………………………… 65 Williams Alligator……………………………………………………………. 75 Ichimoku Simplified ……………………………………………………….… 78 Bollinger Bands ……………………………………………………………. 80 Stochastic ……………………………………………………………………. 95 Exponential Moving Average (EMA)……… ……………………………. 106 Arnaud Legoux Moving Average (ALMA) ………………………………. 112 Moving Average Convergence Divergence (MACD) …………………. 118 Volume Weighted Average Price (VWAP) ………………………………. 126 The Pre-Requisites …………………………………………………………….… 132 History ……………………………………………………………………….... 136 The Risk …………………………………………………………………….…. 136 7 Trading Strategies …………………………………………………………………. 141 MAMA ………………………………………………………………….………. 141 FISHBALL ………………………………………………………………...…. 145 CALMA …………………………………………………………….…….….… 152 PAPA …………………………………………………………………………… 155 TITA ………………………………………………………………………….... 159 BOPIS …………………………………………………………………………. 161 DAY TRADING ………………………………………………………….…… 163 How to Screen or Filter Stocks? ............................................................. 167 Screening Criteria/Chart Studies …………………………………….…. 168 Gandakoh’s Message ………………………………………………………………………. 173 CLAIM YOUR FREEBIES NOW …………………………………………………….……. 174 References …………………………………………………………………………….……… 175 5 What is Technical Analysis? What is Technical Analysis? According to Investopedia, Technical analysis is the study of historical market data, including price and volume. Using insights from market psychology, behavioral economics, and quantitative analysis, technical analysts aim to use past performance to predict future market behavior. The two most common forms of technical analysis are chart patterns and technical (statistical) indicators (Chen, 2020). Ano nga ba ang technical analysis? To make it simple ang Technical Analysis ay isa sa mga paraan na gamit ng isang trader para e-analyze ang isang stock kung ito ba ay okay e-trade or hindi. Technical Analysis involves using charts, indicators, past prices and a lot more. Unlike Fundamental Analysis that primarily deals with the financial health of the company/stock, yung Technical Analysis naman deals with past prices at price actions. Bakit ito ang kalimitang gamit ng mga retail traders? Retail traders often use Technical Analysis or TA instead of Fundamental Analysis dahil sa edge. Kung retail trader ka halos little or wala kang edge if you will use Fundamental Analysis to trade compared sa mga brokers or institutional traders kasi mas malawak ang sakop ng mga ito pagdating sa information about financial health ng isang stock. They can know things ahead sa iyo so wala kang advantage whereas sa TA ay halos same time lang nag aappear ang data sa chart. If you think deeper, yung TA is a study of past prices, meaning it’s a study of past trades which also means na study ito ng mga decisions ng maraming traders. As we go on, you will realize na TA is overwhelming sa una but sobrang dali lang if naintindihan mo na and it’s my job to help you understand. 6 Chart "Ninety percent (90%) of stock traders lose money that's why you should avoid trading and go for investing long-term instead" I hear this phrase a lot. The funny thing about this statement is that those who say this have not traded stocks in their life. They just heard this from someone who heard it from someone and assumed it to be true. Look at this chart. This is PLDT with stock code TEL. If you invested in PLDT 5 or 7 years ago you probably lost a lot by now. Or if you have invested in URC for years ago. 7 These stocks are not third liners. These are blue chip companies. So, slow down with “I’d rather invest than trade.” You can both lose either you trade or you invest as well as you can both gain on it. The only reason a lot of traders lose is because of the fact that most individuals prefer to trade than to invest. That's it. Out of 100 individuals, 90 are traders and 10 are investors. By numbers, there are more traders than investors, thus, there are more losers in trading than those who are into investing. 8 What is a Chart? A chart is graphical representation of an asset's historical price action. A price chart is a sequence of prices plotted over a specific timeframe. A chart tells you a story kung nasaan ang price ng isang stock sa past at present. Example, bumili ka ng balut sa halagang 12 pesos kanina. Kahapon ang presyo ng balut ay 11.5 pesos lang. Nung nakaraang linggo ang presyo ng balut ay 10 pesos lang. Nung nakaraang buwan ang presyo ng balut ay 9 pesos lang. Three years ago ang presyo ng balut eh 5 pesos lang. Date Price in Php December 2 12.00 December 1 11.50 November 27 10.00 September 5 9.00 Imbes na isulat mo ito sa papel in words or digits, gawan mo na lang ng chart at ilagay ang mga presyo. Ganun din sa trading. Instead isulat ang presyo ng stock araw araw eh para mas madali ginawan na lang ng chart. Maraming uri ng chart. BAR CHART 9 CANDLE STICK CHART LINE CHART "Ano ba yang chart chart na yan? Ang complicated naman niyan.” 10 Maraming uri ng chart pero pinakacommon na gamit nating mga Pinoy ay yung candlestick chart. Let me simplify it for you. 11 Ganyan yan. Kapag green ang candle, ang ibig-sabihin ay nagbukas siya sa mababang presyo at nagsara sa mas mataas na presyo. Kapag naman red ang candle meaning nagbukas sa taas at nagclose sa baba. Ang green na candle tawag ay bullish candle at ang red naman ay bearish candle. So ulitin ko, sa loob ng isang araw kapag ang candle ay nagbukas sa mataas na price at nagsara sa mababa na price magiging pula ito. Tawag doon bearish candle. Kapag naman nagbukas sa mababang price at nagsara sa mataas na price, green na candle kakalabasan nun at tawag dun ay bullish candle. Ang simple diba? Kaya kami gumagamit ng chart para malaman ano ang nangyayari sa isang stock. Tumaas ba o bumagsak. Para rin malaman kung ano nangyari sa kanya kahapon, nakaraang buwan o kahit nung nakaraang taon. Nakakatulong ito sa pagbuo ng aming trading decisions. Closing Price is 5.44 12 TECHNICAL ANALYSIS VS FUNDAMENTAL ANALYSIS There has been a decade-long argument between those who use TA and FA. Which one is better? I don't know which is better between the two. Some Technical Analysis (TA) makes sense to me and some don’t. Some Fundamental Analysis (FA) makes sense to me and some don't. If I would be asked to take a side, I will judge them by the result of their trades. If you use TA and you get good results, then go use it. If you use FA and you get good results, then use it. If you use something just because a lot of traders use it, then you are being unwise. 13 THE CANDLESTICKS A candle is a representation of a stock price. May body ang candle at meron ding wick or isa pang tawag nila is shadow. If green ang color it, means nag open ang stock price sa baba or sa mababang price at nagclose sa taas o sa mataas na price. If red naman, meaning nun nag open sa taas o sa mataas na price at nagclose sa mababa na price. Mula sa price kung saan nag open ang stock hanggang kung saan ito nagclose ang tawag dun is body. Mula naman sa body pataas papuntang high or pababa papuntang low ang tawag is wick or shadow. 14 Bakit may ganun? Sample, nag open ang stock sa 100 pesos. Sabihin nating stock A ang name ng stock. At opening hour which is 9:30 AM sa Pilipinas nagbukas si stock A sa price na 100 pesos. After 30 minutes mas dumami nagbenta kaya bumagsak ito sa 98 pesos. Mga bandang 1:45 PM naman mas dumami bumili kaya tumaas ito umabot hanggang 105 pesos. Nung magclose na ang market ang final price niya is 103 pesos. Green ang kinalabasan kasi nag open siya sa baba which is 100 at nagclose siya sa taas which is 103. Mula opening price na 100 papuntang closing price na 103 is what we call BODY. Mula opening price papuntang lowest price of that day is called LOWER wick or shadow. Mula naman closing price papuntang highest price of that day is also called UPPER wick or shadow. 15 WICKS What is a wick? What does it represent? A wick indicates where the price of a stock has fluctuated relative to the opening and closing prices. Pinapakita ni wick kung hanggang saan umabot ang price. Gaano ka taas or kababa inabot ng price sa araw na yun. Sa stock market may buyers at may sellers. Sila or actions uploads/Finance/ technical-analysis-guide.pdf