Technical Analysis
Overview
Technical analysis is a type of asset analysis that focuses on price and volume data. Traditionallly, technical
analysis was done by plotting various indicators on a chart, with the analyst interpreting the presented information.
Today, traditional technical indicators can be analyzed within a machine learning or statistical framework.
Price Dynamics
Price Dynamics
The primary data that technical analysts study is price (and the related volume) data.
In order to successfully forecast where price is heading, it is important to understand the dynanmics that drive
price.
Technical Indicators
Indicators is the name given to various calculated measures used to detect patterns in asset price/volume
relationships. From the perspective of
machine learning, building a set of technical indicators
is roughly equivalent to the
process of
feature extraction.
- Indicators : a
set of commonly used indicators.
- Oscillators :
are a subset of technical indicators, that are generally thought to be range bound, such that
the indicator oscillates between the extreme values of its range.
- Channels :
are a set of two bands around a price chart that are thought to indicate some direction of the price action and
a set of breakout levels.
- Volume
- a measure of how many shares are traded on a given day.
- Candlestick
- candlesticks utilize information of the range of trading on any given day, (open, close, high, low)
Additional Topics
- Assessing Indicator Effectiveness : When you have identified an indicator or set of indicators, the next step is
to test the effectiveness of those indicators. Do they work in a real
trading environment? There are multiple ways to try to test indicators,
two of the most prominent are
regressing returns agains the indicators,
and
backtesting.
- Machine Learning
can be used to create create complex trading strategies using the standard technical indicators.
- Tools:
- Indicator App :
- Visualizing : beyond running trade statistics and testing various models
and indicators, one often wants a way to viusalize the indicators you are using.
