Chart investing or "graph charting" is another method of Technical Analysis. Technical chart analysis appears to have been used at least 200 years ago in Asia. Today there are scores of software programs which display the markets in almost any configuration aimed at displaying the data in an easily digestible visual format. Chart aficionados analyze charts in search of patterns - that is, objects or shapes that call to mind an image of a similar event in the past. It's common to hear the catch phrase "The charts never lie" from a chartist; meaning the chart is always right because it always displays exactly what the market is doing and how the markets "feel" about the stock or security.

Because patterns repeat, most traders believe it is important to use them to some extent to determine the probability of a certain outcome. The problem is that few chartists actually do use pattern recognition in their trading methodology. The charting software market is so confusing and clouded with overlapping and ever evolving products, terms and marketing messages that an investor seldom finds the true science of pattern recognition.

An important goal of Technical Analysis Charting should be to help investors learn to distinguish between trades based upon what they want to happen and trades based upon the most likely statistical outcome. The reality is that while existing charting software can give valuable information about what is happening in the market right now. It seldom reveals the true gem of forecasting, which is; what does today's chart information mean in relation to every previous trading day in history.

Finding patterns should not involve pouring over charts all day. There is not enough time in one's lifetime to process all the data the market has to offer. However, suppose you did have the time, would you notice all the subtle relationship nuances? The only reliable and consistent solution is to use an artificial intelligence neural network that learns as it scans not just history, but all of history. What's more, there are patterns and influencing factors in many seemingly unrelated data and market sectors. Ask yourself: Why is it that Oil and Gold rise and fall together most of the time and have done so since the markets began? Further, does it really matter why, if you can identify (with a chronological numerical process), when it will happen and when it will not?

Charted market data at its heart is nothing more than investor emotions chronicled and plotted on a grid in the form of lines or candlesticks that show what traders feel or felt about that particular investment, stock or security. In the endless sea of rational and irrational emotion inspired trading events, there is predictability.

Discover the results of years of AI development called Forecast Market Software. FMS has found patterns in large indices and its output (the general direction of tomorrow's close price), is available with a free FMS Daily Forecast subscription. All we ask is that you not sell or publicly post the information. If you do trade on this information, we suggest that you use Rydex Funds as we do. I will leave you with this final warning. Having 70% to 80% accurate forecasts does not make you profit, it is knowing how to act on the information that locks in a profit. Please take some time to review the rest of this site to learn more about this.    <Previous Topic | Next Topic>