Q&A for How to Do Technical Analysis

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  • Question
    What is meant by selling short during a downward trend?
    Donagan
    Top Answerer
    It means borrowing shares of stock from a broker in order to sell them at one price, then waiting for their price to drop (in the "downward trend") so you can buy them back at the lower price, thus making a profit (at which point you give the shares back to the broker). This is purely a gamble (but a popular one among some professional investors).
  • Question
    What is meant by "buy at pullback and sell at strength"?
    Donagan
    Top Answerer
    That's another way of saying "buy low, sell high." A "pullback" is a reversal in a rising trend, offering a brief opportunity to buy at a relatively low price. "Strength" is a high price relative to recent levels.
  • Question
    What is meant by saying, "Buy low, sell high"?
    Donagan
    Top Answerer
    It means you should sell shares only when they are valued at a price higher than the price at which you purchased them. In practice, it means you should buy shares only after they have recently fallen in price, and you should sell shares only after they have recently risen in price -- again assuming the selling price is higher than the original purchase price. That's not always easy to do, but that's the theoretical objective in owning stock.
  • Question
    How can I watch how technical analysis works?
    Donagan
    Top Answerer
    You would have to find and contact a value investor, and ask if they would let you observe them at work. A stockbroker might be able to help you find such an investor.
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