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Welcome to The Stock Market Millionaire podcast. This is episode number 14, Beating the Market with Technical Analysis of Stocks. So, students are asking, “Rob, what are technicals? How does it work? What is technical analysis?” Right? The technical analysis of stocks is when we analyze the position, we review the position, we look at that stock, we look at the chart and we’re trying to determine what that position, that chart, that company is going to do based on the historical aspect of where it’s been, the way the indicators work, and how they lay out moving forward as we go into the future, depending on the indicator that we’re looking at. So, each type of indicator is slightly different on the various things that it does.

So technical analysis in nutshell, it’s, we look at a chart and say, how healthy is this stock? Should I take an entry today? Should I exit my position today? Or should I do the most important thing in many cases- NEXT. Pass. I’m not doing anything, I’m just going to leave this one alone, right?

“Is there particular technical analysis software that I need to use?” is a major question I’m asked by students all the time, and the answer is no. You can use any charting service that you like. Any one. You know, I talked a little bit in podcast number 13 about options and practice trading or paper trading, or non-funded trading of options in there, and I talked a little bit about the platforms that I use and the ones I like a little bit more about them. But, for me personally, it’s slightly different when I am just charting versus when I am trading. Why is that different, Rob? Because there are programs that although you can trade from, I use other trading systems and the charting programs just for charting.

So let me, let me give you the brass tax it. I use a program called Omega Chartz with a Z – Omega Chartz. Omega Chartz is meant to be a pure charting system. I have not found a better graphical engine anywhere on any charting service that I’ve ever seen, than what it is in Omega Chartz. It has a phenomenal tendency to allow me to see the chart crisp and clear. It’s the least pressure on my eyes, hence the blue light glasses today. It’s the least pressure on my eyes of looking at a chart at a charting engine. Now that being said, you can trade through there, and there are multiple brokers you can connect to, and there’s nothing wrong with that. But, I like TradeStation as my primary broker. I also have TOS which is Thinkorswim. I have Tasty, which is more of an online service. Although I shouldn’t say that, that’s not really fair. There are programs that are just not as in-depth the program as TOS and/or TradeStation.

Can you use a Schwab or Fidelity or any other one that’s out there? Absolutely. Can use Robinhood or those types of services? Yes. You choose who you want. Each one will have a little bit less. So Robinhood, as an example. I have a Robinhood account. Robinhood has, seems to me to have very little, that I’ve been able to find on the technical aspect from it compared to some of the other programs out there. Things like TradeStation where I have five or six charts open on one window at a time. I have six monitors on the system that I’m recording this off of right now, and of those six monitors, I have TradeStation open on at least five, if not all, six of them at one time and multiple charts on each one, right? As I’m looking at different things throughout the course of the day.

So any particular software you can use, whoever you’re comfortable with. If you’re just starting out, I would suggest starting with the Omega Chartz and the TradeStation are the ones I like. You can use any one, but these at least I know you’re going in the right direction and you’re not wasting thousands and thousands of dollars on charting software to come to find out ‘not quite doing what I wanted it to do.Next question is, do all technical analysis, software programs have the same technical indicators? And for the most part, yes, yes. For the most part, are there some that have more of the proprietary? Let’s try that word again. Proprietary indicators in there? Si. Yes, they do. Right. What does that mean? Well, that means that for the most part, MACD, Stochastics RSI, some of the more common tools are going to be in every program that you look at. Will you find Fibonacci in every tool?

Well, here’s a great example on TradeStation, there is a preset number of lines in Fibonacci that you can use. I can change the values, but it really isn’t enough for me for what I like to use. So what does that mean? Well, that’s why I use other programs like Omega Chartz that allow me to draw and add more lines, double the amount, triple the amount, quadruple the amount that’s on TradeStation, I can add on, on Omega Chartz. And at least I can do my analysis, hence the idea behind this episode, beating the market with technical analysis of stocks, right? At least I can do my analysis first and then worry about where the lines actually show up on my intraday charts as well. Right? But you will find that every single program will have the more common Bollinger bands, moving averages, as I said, stochastics, MACD, RSI, they’ll have all of those inside of them.

But one of the most basic and powerful technical tools to use is trend lines when doing your technical analysis. Having trend lines drawn, whether they are horizontal support and resistance lines, whether they are diagonal trend lines, either one, those are one of the most rudimentary and powerful lines, types of indicators that there are. Do not discount those and start going after the – I love these types of indicators – the upside down flint rubble, bubble cake. Those of you that used to watch Flintstones or know exactly what I’m talking about. Those that go “what are the Flintstones?” Never mind. Okay.

Now, for me though, for Rob, and for my students, one of the best technical analysis tools to use is called a Fibonacci retracement tool, right? What does that mean, Rob?

Well, Fibonacci’s our measurement, when you look at it from a market standpoint, it’s a measurement of human emotion. It’s a measurement of harmonics. It’s a measurement of, when somebody looks at the chart and a stock stops in the middle of nowhere, not near your support or resistance lines, your trendlines, in the middle of nowhere, there’s usually a Fibonacci level inside of there. Fibonacci’s are found everywhere in the world. Music, math, art, science, you look at outer space, you look at this shape of a tree, you look at an acorn, a concrete shell, your ear, the human body known as the medicine, man. You’ve seen it with the guy has got his arms stretched out to the side. Legs opened up a little bit, and there’s all kinds of the measurements from your fingertips to the ground, from your fingertips at the top of your head, from fingertip to fingertip, from your eyes to your nose, to your chin, to your forehead, to your ears, to your center of your eyes, to the center of your nose – all Fibonacci levels. Every bit of it, right, is what we’re looking for there.

Fibonacci’s helped me as a trader be ahead of the curve in most instances. What does that mean? When the average person is waiting to buy a position, I am usually the one selling it to them. Why? Because my indicators told me in advance what was going to happen instead of waiting. Historically, to see what’s happening and making a decision based on that. Now, is that the only indicator I use that being Fibonaccis? No. I love moving averages. I use an eight and the 21 exponential moving average. Don’t worry if you use 10 and 20, it’s close enough. I would suggest trying mine out if you’re using a 10 and 20, because my levels have come from four and a half million days of back testing, right?

I also use things like Wilder’s average true range. I use things like ADX and DMI plus and minus. We’re not really get a lot into it here. This is more of an overview on technicals. We’ll spend time on each individual indicator in it’s own session, right? But every trader, regardless, regardless of your primary training vehicle, needs to use technical analysis. What does that mean? Primary trading vehicle? That is stocks, options, futures, Forex, mutual funds, bonds cryptos. It doesn’t matter. Gold, silver. So it makes no difference. Technical analysis is an absolute must.

Alright. So ladies and gentlemen, there, you have it. Have a great rest of your day and I will see all of you at our next show. Appreciate it. Thank you very much. Take care folks. Bye.