Trading can be challenging, which means it's important to do your homework beyond the above points. Some other key considerations include:

• Firstly, Understanding the rationale and underlying logic behind the technical analysis.
• Then, Backtesting trading strategies to see how they would have performed in the past.
• Practicing trading in a demo account before committing real capital. Being aware of the limitations of technical analysis to avoid costly failures and surprises. Being thoughtful and flexible about scalability and future requirements.
• Trying to evaluate the features of a trading account by requesting a free trial.
• Lastly, Starting small in the beginning and expanding as you gain experience.

Some of the limitations of trendlines include -

1. Firstly, trendlines have to be readjusted as more price data comes in.

2. Secondly, a trendline will sometimes last for a long time, but eventually the price action will deviate enough that it needs to be updated.

3. Moreover, traders often choose different data points to connect.

4. Lastly, trendlines applied on smaller timeframes can be volume sensitive.

• Firstly, a risk-adjusted return measures an investment's return after considering the degree of risk that was taken to achieve it.
• Secondly, there are various methods of risk-adjusting performance, such as the Sharpe ratio and Treynor ratio, with each yielding a slightly different result.
• Lastly, the purpose of risk-adjusted return is to assist investors to determine whether the risk taken was worth the expected reward.

There are three types of trends lines:

1. Uptrend Line This is formed by connecting two or more low points and has a positive slope and. Uptrend lines act as support and indicate that net demand is increasing even as the price rises.

2. Downtrend line This has a negative slope and is formed by connecting two or more high points. Downtrend lines act as resistance and indicate that net supply (supply less demand) is increasing even as the price declines.

3. Sideways Trend This is a horizontal price movement of a stock between resistance and support levels that takes place when the forces of supply and demand are balanced.

Dow Theory was developed by Charles Dow in the late 19th Century based on his analysis of market price action. The Dow Theory has been around for almost 100 years and the basic elements of Dow Theory are still used even in today’s volatile and technology-driven market. Further, the assumptions stated by Rhea for the successful application of Dow Theory,

• Firstly, the Dow Theory states that manipulation of the primary trend is not possible, only individual shares could be manipulated as stated by Hamilton.
• Secondly, the market reflects all available information
• Thirdly, Dow theory should be looked upon as a set of guidelines and principles for assisting investors and traders with their own study of the market.

There are three main types of charts:

1. Line Chart This is the most elementary type of chart as it represents only the closing price over a period of time. The line chart is formed by joining the closing price over a specified time period. This displays the least amount of data and is used by traders who do not focus on details such as the open, high, and low prices

2. Bar Chart In addition to the closing price, bar charts also display the open, high, and low prices for the time period selected. The chart is made up of a series of vertical lines that represent each data point. This vertical line represents the high and low for the trading period, along with the closing price. The opening and closing prices are represented on a vertical line by a horizontal dash. The opening price is displayed by the dash that is located on the left side of the vertical bar and the closing price is represented by the dash on the right side of the vertical bar.

3. Candlestick Charts These charts have a thin vertical line showing the range of the trading period similar to the bar charts. However, the difference comes in the formation of a wide bar on the vertical line, indicating the difference between the opening and the closing price. Candlesticks rely heavily on the use of colours to explain what has happened during the trading period. Two-color are used to indicating days up and days down. When the price of the stock is up and closes above the opening trade, the candlestick will usually be white or clear but if the stock has traded down for the period, then the candlestick will usually be red or black, accordingly.

An efficient market is a place where the market price of the security is an unbiased estimate of its native value. However, the efficient market hypothesis is based on assumptions like:

• Firstly, the market is free without any trade restrictions.
• Secondly. The market takes in all the information quickly and efficiently.
• Thirdly, the information is freely available to all at the same time. Next, the information is correct.
• Lastly, market players can analyze the information fast and occupies the market via buying and selling signals.

There are two types of risk:

1. Systematic risks This include: Interest rate risk Market risk Purchasing power risk

2. Unsystematic risks This include: Liquidity risk Business risk Financial risk Default risk

It is suggested to use an Upside Tasuki Gap to signal the continuation of the current trend. It is a three-bar candlestick formation such that -

• The first bar is a large white/green candlestick within a defined uptrend.
• The second bar is another white/green candlestick with an opening price that has gapped above the close of the previous bar.
• The third bar is a black/red candlestick that partially closes the gap between the first two bars.

1.Amibroker

2. MetaStock

3. AdvancedGet