Last updated 24 Sep 2001
Technical Analysis of Financial Markets
  • Up or down?
  • What is Dow Theory?
  • How is a candlestick chart constructed?
  • When should I buy and sell?

    • Technical Analysis can answer these questions.

    To learn more about technical analysis, sign up for one of the courses that I teach at BPP Hyperion in London. You will learn the basics of technical analysis, and at the end of the course apply your new skills in making forecasts for leading shares. These forecasts have in the past been very good, as the track record shows.

    I have written a trading simulator program which is available to course participants. Click here to download it (password needed).

    Contact me for further info.


    Track record

    At each course, starting Nov 2000, participants given 5-year weekly charts of the UK FTSE 100 companies and were asked to make forecasts of which stocks would be most likely to either rise or fall. The predictions were used to construct a portfolio of longs (where shares were predicted to rise) and shorts (for expected falls). The portfolios were tracked for 20 weeks after the forecast was made.


    Forecast 1: Nov 2000, Stocks long 1, Stocks short 2
    Highest profit: 71%, worst loss: 0%

    Forecast 2: Mar 2001, Stocks long 6, Stocks short 5
    Highest profit: 44%, worst loss: -1%

    Forecast 3: May 2001, Stocks long 2, Stocks short 6
    (after 19 weeks) Highest profit: 44%, worst loss: -3%

    Forecast 4: Sep 2001, Stocks long 8, Stocks short 6
    (after 3 weeks) Highest profit: 21%, worst loss: 0%

    Portfolio construction method
    Initially, the total value of all the long positions is £100,000, and the total market value of the short positions is also £100,000. The £100,000 of longs is split equally between each long holding, so for example if the portfolio contains 5 longs, each long starts with a value of £20,000. If the share price is £4, the number of shares held in that company (which is fixed for the life of the portfolio) is therefore 5,000. The same procedure is used for the short positions. 

    Example: March 01 portfolio valued as at 27 Jun 01
    LongsNo of
    shares    		March 01
    price    		Cost June 01
    price    		June 01
    mkt value
    Allied Domecq3,903427£16,6673,903£17,544
    Anglo American1,4791127£16,6671,479£15,521
    Imperial Tobacco2,268735£16,6672,268£18,685
    Reckitt Benckiser1,754950£16,6671,754£18,158
    Reed Intl2,402694£16,6672,402£14,673
    Tesco6,361262£16,6676,361£16,952
    Total£100,000£101,533
    Profit£1,533
    ShortsNo of
    shares    		March 01
    price    		Cost June 01
    price    		June 01
    mkt value
    Marconi4,292466£20,000237£10,172
    Pearson1,3201515£20,0001125£14,851
    Sage6,873291£20,000262£18,024
    Schroder1,6951180£20,000831£14,076
    Spirent5,277379£20,000177£9,340
     2020
    Total£100,000£66,464
    Profit£33,536

    Total profit: £35,070 or 35.07%