1: technical analysis Definition
2: how technical analysis works
3: technical analysis vs fundamentals analysis
4: example of technical analysis
Opening information:
Technical analysis sentence breaks into two words technical and analysis, technical means practical techniques tools, or matter of techniques technology, and analysis means research of something.
Technical analysis means using technological tools or skills to do something, so now let’s have a look at what is a technical analysis, how technical analysis works in the stock market for all Corporate Industries among stock Investors, and what is the difference between the technical analysis and fundamental analysis, finally one clear example about the technical analysis.
1: technical analysis
Mr. Fariq is a stock trader who trades for a quick buck of profit anyway, and his trading is completely based on the research of price charts through prediction.
Fariq never looks at what business he purchasing and does the company makes money or not in the real market, instead he quite focuses on the history of price movements.
He uses the support and resistance line tools to analyze certain stock prices and make future predictions.
If he did hundreds of trades using these support and resistance tools, he would most likely make more than 30 percent of the total trades. This helps him to make a decent amount of money which is up to 10 to 25 percent per year.
Moreover, for all the research only depends on price technically alone, but long-term Investors consider the business profits and other things.
Here the fariq research made for prediction about the next stock move by using the resistance and support line tools is called a technical analysis of the market.
So now let’s dive into know-how technical analysis works in the stock market among all stock traders.
2: how technical analysis works
Technical analysis is the concept of researching the Securities of the market instead of researching and learning the fundamentals things.
Using tools of external things to research and predict the current market for future growth is called technical analysis.
Technical analysis doesn’t represent any specific object or thing, despite it being one that occupies all the necessary things that are used beyond the fundamental thing.
The fundamental things are not just Securities in spite is a business which issued the stock as an Ownership in the public market.
Using and looking at one risk and fall of Security to predict the market which rises or falls makes quick profits for the traders.
To predict the fall and rise of one stock, the Investor uses hundreds of analysis different tools to predict the market move accurately.
But these tools do not say the next move of the markets instead they help to show the past move effectively by showing what side the market had a probability to move on future.
There is also a high chance, that certain stocks will move against the prediction, so there is no guarantee and certainty of the next market move using the technical tools.
Normally the technical tools are Bollinger Bands, Stochastic oscillator, Relative strength index, MACD, On-balance volume, Average Directional Index, Oscillation, Volume And Momentum Indicators, Accumulation/distribution index, Candlestick chart, bar chart, simple moving average, exponential moving average extra…
Each of the tools represents different activities or tracking numbers, using these tools most of the stock traders speculate and make lots of quick profits, and at the same time, they too lose huge amounts of profits.
Most people’s confused the technical analysis and fundamental analysis so let’s jump into the key differences between them.
3: technical analysis vs fundamentals analysis
The difference between the technical and fundamental analysis is, that the technical analysis is quite focused on using some technology tools to use the advanced things from the fundamental things.
Fundamental analysis is the one that represents the basic and starting things of one skill or item to do research for some identification.
This technical analysis shows the research of one kind of Security using artificial tools, and fundamental analysis demonstrates the research, not a Securities use of any technical tools but instead the business company.
To make you more clear about the technical analysis, let’s look into one clear example anyway.
4: example of technical analysis
Say that you and your friends made an investment in the same securities but with different routes, your friend made an investment by using a technical tool called MACD completely based on the past stock price history movement of such security.
On the other side, you had invested in the same security that your friend Invested in but did not use the research of any technical tools despite investing by researching the company behind that security.
Here you made an Investment by using the technical analysis and you invested by taking the fundamental analysis.
Non-Market rule: #100173
Technical analysis is not considered a market rule because it tool used on the market to perform the technical trade, so making investment decisions based on the technical analysis is completely responsible from your side.
If your investor and not comply or align investing with based on market rules please learn about how to regulate your investments under your control with the use of Rule investing.