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Trading Secrets: Killer trading strategies to beat the markets and finally achieve the success you deserve, 3rd Edition by Louise Bedford

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Chapter 13: Sector analysis — your shortcut

In this chapter, you will learn that:

• There are two broad approaches to searching the market for opportunities — top-down analysis and bottom-up analysis.

• Top-down analysis compares each sector index with the All Ordinaries to see which sectors are outperforming the overall market average. Sectors that are outperforming the All Ordinaries are more likely to contain shares that have a higher probability of increasing in value in the future.

• Bottom-up analysis involves searching for shares that have a series of bullish indications, regardless of which sector they are associated with. This can be an effective way to identify trading opportunities.

• An advance/decline line (A/D line) measures the ...

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