The Question Of Ownership
tages of using moving averages are determining the length over which to calculate the average, and spotting the underlying trend. Such underlying trends will inevitably be historical.
But even from the graph in Figure 1, it can be seen that the troughs are gradually increasing, indicating an upward trend. Charting aims to see what the share price is going to do next according to the picture it draws on the graph.
Remember that share prices are governed by perceived value, which allows self-fulfilling predictions. It is also only fair to say that some analysts do not believe in charting at all. They believe that shares generally move without any regard to what they have done before. This is known as the 'random walk theory'. On the other hand, it ought to be stated that chartists have demonstrated sufficient measure of success to regard their methods as being worthy of explanation.
The methods are quite simple, just involving plotting share prices as a line graph and looking at the pictures. Many laptops have software that will draw these graphs for you.
The pattern of fluctuations reflects the conflicting views of market-makers regarding the shares. The reasoning behind why such views lead to particular patterns and what the investor should do, is rather academic. It is sufficient for the investor to be able to recognise the'pattern and kno
Next:
- Demack on How To Develop A Vision To Ensure Success Unquoted Companies
- Demack on Present Ownership Situation - 2024
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