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Investment Strategies
Categories
- Value Investing
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Growth Investing
|- Income Investing
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Market Capitalization
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Momentum Investing
- Technical Investing
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Buy and Hold Strategy
- Buy What You Know
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Contrarian Investing
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Turnaround Investing
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Tobin’s Q
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Responsible Investing
- ADR's
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Global Investing
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The Dow Theory
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Odd-Lot Theory
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Election Cycle Theory
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Dow Dividend Theory
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Penny Stocks
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Initial Public Offerings
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Dollar Cost Averaging
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Drips
- Risk Tolerance
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Technical
Investing
Technical investing is a
market and stock timing discipline, whose participants analyze charts and
graphs to make investment decisions. Technical investors fundamentally
believe in the efficient market theory: that all information on the markets
and on individual stocks are known and are priced into the securities, and
that securities are fairly valued at all times. That said, what moves the
markets and individual stocks are the emotions, reactions, and psychology of
individuals regarding economic events and news. Technical investors believe
that reactions fall into repeated and predictable patterns, which can be
measured by using charts and graphs. By identifying these patterns early,
and by determining where on the chart your investment lies, there is a
probability of predicting future price movements that can aid in your stock
buying or selling decisions. Technical investors also rely on mathematical
indicators to help predict future price movements.
Most smart investors use
both fundamental and technical analysis when making investment decisions.
The fundamentalists use terms like sales, earnings, and cash flow to
research a business and value its shares. The technical investors use tools
such as: resistance and support levels, trendlines, oscillators, head &
shoulder formations, etc. to determine stock price trends, as well as entry
and exit points, when trading.
Young adults need to
understand technical analysis, as it is the foundation of many successful
trading strategies.
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