Technical analysis of the stock market or any other market is how most investors and traders make their trading decisions. This is as opposed to fundamental analysis which most people more agree is pretty much done as a way of making trading decisions unless of course, you are Warren Buffet!.
Reading the balance sheet and other quarterly reports alone gives you a very limited insight into the real health status of the company. Meanwhile, the technical charts of the company tend to give the real picture of what the market thinks of the value of the company.
In the stock market environment, there are often two fundamental concepts that traders base their trade selections off of, fundamental analysis and technical analysis, which are heavily used by people who have been structuring a hedge fund. With fundamental, you are looking towards current information to base your decisions on like company success, yearly profitability, new product development and many other factors that will lead you to the decision to buy or sell. When understanding what technical analysis is, you are taking a different style of predictability and looking into market patterns and the trends of stocks rising or falling. Through these trends, you will identify a potential pattern that will lead you to the conclusion of whether a stock will rise or fall. Taking advantage of online technological resources and market history can greatly aid in simplifying technical analysis so that an individual can take advantage of it.
There are a number of ways an individual can implement their technical knowledge of understanding when seeking to create a financial gain. The first area to look into is at patterns of the stock market as a whole and to see when the entire market will be weak and strong, in order to base stock trades on. The second area to look at is found with patterns in specific markets, like technology for example. When you can understand the pattern of market sectors, you will be able to capitalize on its highs and lows, finding profits from the individual stocks in that market. Finally, the third opportunity an individual can take advantage of utilizing technical analysis is found with predicting the patterns of individual stocks and their likelihood for loss and profit repetition.
When an individual is looking to define what technical analysis of stocks is, they are typically at a point where they are seeking new ways to assess market patterns or seeking to break into this opportunity. While fundamental analysis offers an individual many practical solutions to finding financial profit, it can be difficult for a single individual to process all the information available to them. Why would a person not take advantage of the opportunities technology has provided them and utilize all the aspects associated with technical analysis? If you were looking to briefly summarize and answer the question “What is technical analysis?” it can be referred to as a market research technique, offering predictions through market patterns and providing success to many individuals who properly utilize the technique.
So if you still do not understand all that mumbo jumbo check out this technical analysis of stocks blog.