Technical Analysis: 12 Important Features of Technical Analysis!

If one looks closely at the commercial world, it revolves entirely around “predictions”. Every trader or investor would like to get an idea of ​​the outcome (technical analysis) of a particular stock or stock, before parting with their hard-earned money!

In fact, seasoned veterans can correctly predict the ups and downs of financial values. This is how they make loads of money!

But this “predictive ability” is absent in most people. Even experts can be wrong sometimes, forget about newbies in this community! Therefore, a new tool called “technical analysis” has come on the market to help in these matters. Since the results of its use have proven to be favorable, more and more traders and investors are looking for it.

Let’s examine all the features of this new tool:

(1) The correct definition of technical analysis is “the ability to predict a particular security in the financial market.”

(2) This type of analysis revolves around the actual movement of the market; this is not the case with fundamental analysis. Factors related to politics or economics are left out, although they have an impact on the movement of a market.

(3) Look for patterns or trends that may be repeated in the future. When this knowledge is available, predicting what will happen in the future becomes easy.

(4) Although this analysis is quite reliable, it is advisable to carry out a fundamental analysis as well. A comparison between the results of both will give a double advantage to precision.

(5) How is fundamental analysis different?

If you are going to do a fundamental analysis on a particular company, include factors such as: how the company manages money, how it has performed in the past, and how stable the current government is with regards to forex trading. Therefore, this analysis investigates the reasons for the market movement.

Technical analysis only cares about how the market will actually move. The present or past performance of the company, how you take care of your money, all this is irrelevant!

(6) Anything that claims to be perfect is naturally viewed with skepticism! So too this new tool, and its claims to be efficient and accurate! People wonder how past market movements can help predict the future.

(7) Technical analysis will have to take the help of quite a few indicators to predict the future of financial securities, such as volatility indicators, price change indicators, strength indicators, etc.

(8) Indicators are not enough, some kind of software is also necessary in order to monitor the results. The software must have these functions: real-time data transmission, zoom functions to be able to see the changes clearly and graphs to base the predictions, among others.

(9) There is a lot of software available in the market, but it is advisable to choose one that studies how a particular security has behaved in the past and accurately predicts its future.

(10) How are market patterns detected?

Each day, the opening price of a particular security, its highest price of the day, the lowest price of the day and its closing price at the end of the day must be taken into account. Daily data collection leads to setting a pattern for the future.

(11) The most important thing to remember is that no technical analysis can be 100% successful in its predictions, despite the best software available. This type of tool is only intended to serve as a guide.

(12) Finally, whatever the software, whatever the technical analysis, the ultimate decision maker is “the person”! Yes, this tool with its software gives very good guidelines, but instinct or a sixth sense should play a more important role if the trader or investor wants to achieve great success!