What Is Technical Analysis?

User Rating: 5 / 5

Star ActiveStar ActiveStar ActiveStar ActiveStar Active
 

Technical Analysis is a study in price patterns, that can be used to forecast the future direction of prices through the study of past market data. Technical analysis stands in distinction to Fundamental Analysis. Technical analysis "ignores" the actual market nature and is based solely on "the charts," that is to say price and volume information. Technical analysis is widely used among traders and financial professionals to forecast stock, forex and commodity prices.

What is Technical Analysis

PURPOSE OF TECHNICAL ANALYSIS
Technical Analysis seek to identify price patterns and trends in financial markets. Technical Analysis believes that a market's price reflects all relevant information, Price also move in trends and tends to repeat itself because investors collectively tend toward patterned behavior. Because price patterns tends to repeat itself, trader can benefit from knowing this trend. Using Tecnical Analysis, trader can "predict" what will happen in the market and take profit from it.


WHO USES TECHNICAL ANALYSIS?
Generally, users of Technical Analysis are traders, who want to take advantage of price fluctuations to gain profits.

 
WHAT TECHNICAL ANALYSIS CAN BE APPLIED TO?
Technical Analysis can be used on all financial products that have price data. Starting from stocks, forex, commodities, futures, and so on

 
HOW TO DO TECHNICAL ANALYSIS?
Technical Analysis always use graph (chart) to do the analysis. Therefore, traders who purely using Technical Analysis are called "Chartist". At the beginning of Technical Analysis, traders used to create a self-made price charts. Fortunately, now a lot of software are available to traders. They can display price graphs and analysis in real time.  Popular software in forex trading is MetaTrader, which has Technical Analysis capability. This software is also free to use.

Technical Analysis is a study in price pattern


Hopefully this article useful.

written by
Desmond Wira
http://www.bigwinforex.com