Technical analysis
It is the study of market action,mainly through the use of charts and indicators to forecast the future price of a security.
That is how technical analysts apply their theory:
a) Market action discounts everything.
The price you see is the price you get.
b) The price of any given security is
moving in trends.
c) The historical trend of a security will
tend to repeat itself.
Using a technical approach, as a technical analyst, you believe that the true value of the security as the market sees it.
All the factors that affect price including fundamental,politcal and psychological have all been built into the price you see.
You have to manage the trade based on the priciple that the stock has chosen a direction for the day and you are on the board for the ride.
Trading is not easy...
One of the biggest challenges is following the signals of the market.They may be based on an indicator or your intuition.
Once,you hesitate and the opportunity is gone.
So what can you do...
Build your trading plan with risk management as mechnical as possible.
No emotion will be involved.Strict with your plan at any time.
Be an visual trader...
Tools for technical analysts are indicators,patterns and systems.
These tools are applied to all trading charts.
Examples of the most popular indicators are:
a) Moving averages.
b) Support and resistance lines.
c) Trend lines.
d) Bollinger bands.
e) MACD.
f) ASR momentum indicator.
g) Money flow.
h) Full stochastic oscillator.
i) Many more.
