Pseudo Securities For
As you develop your analytical skills, you probably pick a
favorite market to study. So depending on the market, you
could come to different conclusions about the value of different
techniques of analysis. With that in mind, what if you used
artificial data with distinct properties as a basis for learning
the attributes of technical methods? In this, the first of a threepart
series, we explore the notion of using pseudo securities.
The objective of technical analysis
is to locate securities with the
necessary volatility to make potentially
profitable round turns,
and to predict, based on available
historical data, suitable entry
and exit points. Although the
chart of the fictitious Omniscient,
Inc. [OICT], shown in
Figure 1 suggests it is a reasonable candidate, each technician
will have his or her own approach to predicting price movements.
Support lines, channels, indicators — which would be
the correct tool?