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Technical Analysis Explained

Todays Date: October 17, 2018

Understanding what is going to happen in the future is something that everyone would like to have. But we have all seen that there is really no such thing as a crystal ball in stock trading. There is however something that we can try to work towards and that is the use of technical analysis which could help get a view on the future by using the lessons that have been learned in the past.

Technical analysis is when analysts take market trends from yesterday, last year or a few years back and look at the way in which the prices of certain items (be they goods or shares) were managed and the volume in which they were bought or sold. Using this information, they are then able to forecast what the market trend of that particular item or product will be in the future.

To obtain the information that they require, an analyst will often make use of various charts, models or even an index. This is a good means of tracking data and then also trying to determine what trends are likely to be present in the future market. It is clear that the charts such as a candle stick or open low chart are very good as a means of actually depicting the way in which trends are likely to be shaped.

The study of technical analysis was first developed by J Welles Wilder and has become an intricate part of every day life for many traders and financial professionals. Many companies look to their technical analysts in the hope of securing the market share that the company so desperately craves.

Whilst using technical analysis is often frowned upon by fundamental analysts who use actual company stock position, market position, etc. To make their predictions, larger corporations now employ both technical and fundamental analysts.

While technical analysis is not going to offer you a crystal ball into the future, it is certainly a good tool to make sure that you are as prepared as possible for the type of opportunities that could come your way. Make sure that you understand the historical movements of trends so that you can use these to your advantage in future markets.

For more from Mike Swanson go to his free technical analysis website.

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