What is Technical Analysis?
In simple words, Technical Analysis is the study of a security’s price chart. These charts come in various types. Types include line charts, bar charts, candlestick charts, and point and figure charts to name a few. Candlestick charts are great to discover patterns in price and market sentiment. We will talk about this soon.
Now, with the help of this study, the analyst determines to a great extent where the price will move next. This is not a magical analysis. The analyst only gets better with practice. However, getting the accuracy of being right 9 out of 10 times is completely possible! This may seem inconceivable but is possible due to the fact that history tends to repeat itself.
In the Stock Market’s and otherwise, if something has happened once, it is very likely that it will happen again.
Next, while studying Technical Analysis, the analyst comes across elements that are known as patterns. These patterns basically take into consideration the market participant’s behavior and their emotions during that particular time period. Once the analyst can read charts, judging the market sentiment becomes easier.
Why this is important is because the price of any security rises because there is growing demand. Similarly, the price of securities falls because there is less demand for it. This way, using Technical Analysis, one can clearly know when to buy or sell a security. As well as, how long to hold on to it for.
What else does this study include?
Apart from Patterns, Technical Analysis also includes Volume and Indicator Studies. Volume is basically the number of trades during a particular time period. Understanding Volumes can make or break a good trade.
Next, Indicators are tools that use mathematical formulas and themselves, ‘indicate’ brilliant buy and
We as a Stock Market Training Academy teach in the Live Markets exactly how to build this conviction. Be it for Intraday trades, Swing/Delivery/Positional Trades, and so on.
The Advantages of this Analysis
One of the biggest advantages of using Technical Analysis is the ease of using it. Thanks to technology, broker’s trading terminals allow analysts to conduct all sorts of studies on the charts. What’s
What’s more is that thanks to technology, setting your target and Stop-loss has never been easier. All one needs to do is research, Place an entry, Set your Target price and Stoploss, and that’s it! After this, you can go about your work.
A stop-loss is a price you set below your buy price. This is placed in case your trade goes against you and helps prevent further losses. It is a very important part of trading and there is much more to it.
But keep in mind, the research plays a very vital part in trading or investing. Without it, you could make losses.
It is also important to set Target levels as the price of the security may touch that zone and not return for some time.
One can find out where to place Stop Loss and Target levels by understanding all about Technical Analysis.
Technical vs Fundamental Analysis
There is no right or wrong way of participating in the Stock Markets when it comes to choosing either one form of analysis. This is a huge misconception. As a matter of fact, they both have their advantages. In fact, mastering both the forms of analysis can result in the trader looking at his/her trades in various ways. As well as the investor, getting a good price for his/her long term investment.
Even though both are beneficial, Technical Analysis is of greater use to short term traders. These short term traders do not care about the company’s financials or management as they do not invest in it for the long run. Instead, they conduct Technical Analysis and determine whether they can make a profit by holding a position in that security for a short period of time.
As for investors, Technical analysis can serve as a powerful tool in purchasing the stocks of a strong company for a long time. This makes it a perfect buy.
Next, Technical Analysis is a major requirement for trading Futures & Options. The main reason for this is the prices of those securities are majorly impacted by the demand and supply in the market, which is what Technical Analysis is all about.
Goaled’s Technical Analysis Course
What’s more, is that We also offer an All-in-One Course. This course consists of Technical & Fundamental Analysis. We have devised this course to give the student the utmost understanding of the Capital Markets. In this course, we also perform Live Market Training. You can find out more about this course here.
We also guide our students about what strategies they should adopt, as well as train them in terms of risk to reward ratios in the live market. Needless to say, we are very reasonably priced
For more information on our Technical Analysis course, click here.
Lastly, check out some of the trades We have taken ourselves here.