In this new program, analyst Sandy Jadeja teaches you in a series of episodes of how to find upcoming opportunities using technical analysis and charting techniques. What exactly is technical analysis and charting techniques? In this episode, we're going to go into minute detail of what these aspects are actually about.
A lot of people come to the stock market and consider fundamental analysis vs. technical analysis, and sometimes a combination of both. Which analysis method do we use to actually find upcoming opportunities?
Definition of Technical Analysis: Technical analysis assumes that non-random patterns exist in the financial markets. Traders look at these patterns for potential profit.
Definition of Fundamental Analysis: Fundamental analysis refers to the economical factors supporting future price movements. Investors look for price earnings growth along with analysts expectations for longer term growth.
What exactly is Technical Analysis?
Technical Analysis is the study of price behavior in the financial markets. Technical analysis takes into account the Price, Time, Volume, and Patterns. With technical analysis, we anticipate rather than predict an outcome. Therefore, there are no guarantees of certainty.
5 Basic Reasons for Using Technical Analysis
1. Prepare for opportunities in advance. This way, you don't need to wait and refer to analyst reports and company financial data.
2. Improve your timing for buy and sell entry and exits.
3. Precise levels for placing orders in order to get into the market and get out of the market
4. We can use technical analysis to select better trade prospects quickly just by looking at a chart.
5. Assume that Price is the most important indicator rather than pouring through a company's financial data and numerous analyst recommendations.
Technical Analysis Methods
1. Trend Trading - We want to trade with the current direction of the market.
2. Support & Resistance
3. Breakouts - Look for possible breakouts once a market enters a trading range. We want to find out which side of the trading range the market is likely to breakout from.
5. Elliott Wave
6. Market Timing
3 Main Trading Styles
1. Position trading (medium term). Time frame for position traders is between days and weeks of holding a position.
2. Swing trading (short term) where traders hold a position for a few short days or a couple of hours.
3. Scalping or day trading is trading that occurs intra-day, or during the day. Traders may hold positions for minutes or even just seconds.
Download Our Free eBook
And subscribe to our MarketHeist Guides newsletter!