Understanding Technical Analysis
- Author Adam Heist
- Published July 3, 2007
- Word count 592
Stocks need to be understood before making any major moves. This can be accomplished by a few methods known as analyses. Technical analysis is one of the most useful methods to understand the trends of the stock market. Technical analysis is a method in which the stock chart data is examined and the future moves in the market are predicted on their basis. Investors using technical analysis are not bothered about the kind of companies they are dealing in. These investors are playing for short-term. They will sell their stock as soon as they reach the limits of their projected profit.
Experts who study technical analysis presume that the stocks will move in certain predictable patterns. These would take into account natural disasters that could drastically affect the stock market. These experts consider both geographical and historical information to decide in what manner the stock market would move in the future. Technical analysis depends on such external factors, but it does not study the potential of the company itself whose stock is being considered.
For this reason, investors who rely on technical analysis do not play for the long-term. They are not interest in the growth potential of a particular company, because they will likely be gone from the market by then. The whole premise is based on the movement of the market as a whole, and the entry and exit points will be charted on the base of such market fluctuations.
It is possible for investors to benefit from upswings as well as downswings in the market by playing for either the long-term or the short-term. Orders such as stop loss and limit can be used to make the investments safe.
The modern technical analyst has several tools available at his/her disposal. Since the stock market has been playing for several centuries now, many stock patterns have developed. The basic concepts are still the support and resistance, which are applied to the lowest limit a downswing price can go to and the highest limit an upswing price can go to, respectively. Support and resistance are the limits from which the prices will bounce back, once they reach that level.
Charts are a very important tool used by the technical analyst. The most popular charts are the bar charts, which contain vertical bars representing the stock prices over a particular time period. The bar chart will show the highest and the lowest prices at both ends of the bar. If the bar is long, it means a larger price spread, while if the bar is short, then it means a smaller price spread. The position of the side bars would indicate whether the price increased or decreased and also the spread between the opening and closing prices.
Another popular kind of chart is the candlestick chart. Here solid bars (known as candles) are used to show the variations between the closing prices and the opening prices. Shadows are used from the candles to indicate the highest and lowest prices respectively. Color coding is used in this method. A black or red candlestick would indicate that the closing price was lower than the previous period, while a white or green candlestick would indicate the price closed higher. Apart from the color coding, shapes can also be used to indicate several things. A green candlestick with short shadows would mean a bullish market, while a red candlestick with short shadows is a bearish market. The candlestick pattern is a very sophisticated type of pattern, with about twenty different kinds of shaped in use.
Adam Heist has helped many internet surfers since launching his website. If you have questions or concerns or are wondering about the different Bad Credit Secured Loan that are available, click on over to our site in order to find the information you are looking for.
Article source: https://articlebiz.comRate article
Article comments
There are no posted comments.
Related articles
- SCOFI: Pioneering Venezuela’s Petroleum Industry for Over 65 Years
- To Understand Risk, Start By Asking What You Don’t Know
- How To Make Money On Binance: A Full Guide
- Airbnb Investment 101: Tips for New Hosts in Australia
- Indian Gold Demand Rebounds During Important May Festival
- The Investment Terrain in Crypto, Blockchain, and Web3
- Exploring Bitcoin: Corporate Giants Embrace the Cryptoverse
- The Significance of Static IP Address for Trading
- TYPES OF FOREX REGULATIONS
- Weekly Events: Avalanche & Chainlink Collaboration, CommEx Closure, And More
- Assani Elolo Ronaldo - How Bank Instruments Facilitate Gold Deals
- Crypto News: Mempool Solana Shuts Down, Police Integrate Cardano Into Their Work, WhiteBIT And FC Barcelona Launch New Course
- Is Crypto Entering 2021 Vibes?
- Bitcoin Updates All-Time High In Momentum Amid Its Scarcity
- Analyst Announces Bull Run Start, Cites Stock-to-Flow Strategy
- Weekly Crypto News: Telegram Pays Toncoins, WhiteBIT Is Now TradingView Broker And More
- undetectable banknotes
- Unlocking Financial Success: Why Successful Portfolios LLC is Your Best Advisor
- Are EVs a Threat to the Republic?
- A Deep Look Into Binance: Can It Really Be Trusted?
- Ledger Live - Most Trusted & Secure Wallet - Ledger
- Decoding the Future: Navigating the Crypto Landscape
- Don't Cry for Me General Motors
- Investing in exponential growth stocks: what can you choose
- Leveraging ChatGPT AI for Smarter Stock Market Analysis and Investments
- Shib, Doge, and Pepe Have a New Competitor: The Rise of $FUFU Token
- Unlocking Wealth: The Power of Apartment Syndication in Real Estate Investing
- 6 Reasons to Invest in Bitcoin
- Blockchain and AI Convergence: A New Era of Innovation
- Financial Planning for Small Business Owners: Tips for Success