Real world technical analysis
by Kent Calhoun
Simplicity and common sense trading methods summarize my approach to technical analysis. The
purpose of this article is to educate traders to view price action from a more creative perspective, starting
with a return to the basics of technical analysis.
In over 20 years of trading, I have tested several hundred trading systems, using computers and manual
methods. The common denominator for the most successful systems is simplicity. In this series, I will
describe a number of systems, but any trading method or system presented here should be thoroughly
tested by the reader before trading in the markets.
Role of a technical analyst
The philosophy of a technician is that all fundamental information is contained in current price levels,
and that price history often repeats itself with distinct characteristics. Charts are people-patterns. What
people believe, and how strongly they believe it, is reflected in price, volume and open interest figures.
For every buyer who believes the price will rise, there is another person who is convinced the price will
fall. Prices, like flowing water and most people, always seek the path of least resistance.