Akcieatrhy (Akcieatrhy.cz)
Markets  |  January 03, 2013 09:58:25

The wealth of knowledge market phase

“Akcieatrhy.cz“The four phases of the cycle prices on the example of AAPL and RIMM.

Many Apple fans are going to buy again and shakes his head in bewilderment when they hear, they should avoid this share, which is good, because as traders we need someone to buy shares from us, if we want to realize your profits. But this is not a joke. The following graphs clearly revealed in some very interesting information that we should not afford to miss. When do you want to make your own judgment, do not hesitate and you will see the following graphs.

The four phases of the cycle of shares

Markets are inherently cyclical. It is a steady process of repeated growth and decline, which is constantly repeated, because the market is constantly trying to determine the theoretical fair value of the security. These periodic price movements take place across all time frames, and their sum produces characteristic on the price chart of price formation.

During the cycle the price of different phases. Since irrational excess demand price near the top, to the stage of long-term neglect, when the price gets beaten up and falls. However, one applies, there are no "bad" or "good" stocks. Every "good" stocks eventually becomes necessarily "bad" shares and this cycle repeats continuously. However, this cycle can identify good business opportunities that will reward the investor if can recognize and predict a nice profit, unless they are able to use it.

It is important to know that the same principle is also applied to commodities such as gold , silver, which is now in a very interesting phase of this cycle. You can make sure of that with my own eyes, when you look at graphs GLD and SLV.

Classical economics divides the business cycle into four distinct stages: growth, stopping the growth, decline and recovery. From this perspective, the stock price behaves exactly the same and goes through the following four phases:

Phase 1- After a time, when the price falls, the stock price consolidates, and is concentrated in a narrow price range. Shoppers enter the market and try to take the initiative after the price drop. Sellers shrinking and price action is neutral. Seller is leaving his position and shoppers begin to accumulate shares.

Phase 2 - During taking control of the movement of prices exceed interest over the interest of buyers and sellers share price begins to create higher highs and higher lows. Begins bullish growth and support prices will gradually move upwards. Traders and investors aggressively buy and use price dips to buy more positions.

Phase 3 - During prolonged growth in the share price is beginning to run out and purchase an interest in re-entering the market vendors.
This period of consolidation and distribution is characterized by neutral price action and prevents a price decline.

Phase 4 - After an low price to break Phase 3 begins sale and selling their number exceeds shoppers. This creates the formation of lower lows lower peaks. The share price goes into a downturn. Begins bearish decline. Traders with a well constructed positions use this to aggressive sales at short and benefits from the sharp decline in the share price. During the fall often happens that the cost in a short time reach the level or even below them, where the starting phase 2

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These cyclic phases of development can be apparent on the long-term charts, but the same structures found in all time frames, which allows traders to benefit from the knowledge of the cycle.This phenomenon where the same geometric pattern repeated at lower level, called fractal structure and find it completely in all capital markets.

Chart Analysis 1

Understand this scheme is important because using technical analysis can examine various timeframes and can be found in all the four characteristic phases. This model four phases may be repeated several times to create the same formula on a higher timeframe.Recognition of these phases in any time frame is essential to successful trading.

The typical course of development of the share price: The typical course is found again and again in every market and every "good" stocks are inevitably becomes "bad".

Chart Analysis 2

Business styles

Investments in equity markets ( stocks , ETFs , options , futures) that could be likened to the athletes carrying the individual disciplines. Each athlete for a particular discipline must have appropriate properties and body composition. Sprinters have the speed and explosiveness, but soon tires, compared to the last marathon runners run at a slow pace and without rest, and very long.

When we look for in the chart sprint business opportunities, we can be very successful. Other traders may start looking more for long-term investment plans that stable long-term gain. Such traders are like relentless marathon runners. There are more trading styles and trading techniques and each of them can equally be both profitable and loss-making. It is necessary to determine which trading style suits you most and it can only come by to try it.

To be continued on akcieatrhy.cz ...

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