Countless traders join the stock market with hope and excitement every day. Out of these hopes, some are answered while others remain unanswered. There will always be excited and content traders and grumbling traders at the end of the day. If you ever pay attention to the content and happy traders, there would exist a group that remains happy most of the days, if not always. Is it mere luck? The question may arise in some minds. You may pay more attention to this group. The outcome? Lady luck still continues to bless these people most of the days. So, is luck biased? Well, maybe it is. While one cannot argue some unusually crazy-luck-blessed people out there, lady luck usually only blesses the smart and hard-working ones.
Role of technical analysis
Traders believing the old myth, trading is gambling are usually the first ones to go broke. Trading, in fact, is actually a very sophisticated mechanism that is influenced by countless firms, influential people and other traders. Seeing is believing. You can find successful long-term traders or trading experts whose advice hits the mark 9 out of 10 times. These cases can really not be called flukes. Just go and try to understand more about trading. Watch some free videos on trading guides put on YouTube by us i.e., ChartAnalysis, Olymptrades or others. Trading after understanding various concepts developed by old-time traders really does make a lot of difference. Take, for example, technical analysis.
Definition- Technical analysis
Technical analysis is a simple but game-changing concept. It helps in narrowing down the candidates for the most common problem, which stock to buy. Technical analysis, in simple words, is the approach of determining a security’s value based on its price and volume. Using historical trading data
of security, this concept aims to estimate its future value. From our personal experiences, the best way to utilize the results of technical analysis is to use it in conjunction with other forms of research.
Why use technical analysis?
The trade market is created and run by humans for humans. Thus, nothing is actually random in the trade market. Every bullish and bearish period of security is a result of human activity. The investing legend Ben Graham also points out, “In the short run, a market is a voting machine, but in the long run it is a weighing machine”.
Thus, it is necessary to know how the shareholders, potential shareholders and society think about security to initiate a successful trade. Technical analysis, in fact, helps you understand how current shareholders of an asset are voting and in turn, tell you how they’re feeling about the company. Understanding the sentiments of the market gives a trader a better and much clearer view of the blurred future of security. Learning the sentiments of the existing shareholders along with fundamental analysis, i.e., analysis of business operations can really give you “the edge” over others.
How to go about technical analysis?
Technical analysis is all about making, checking and analyzing charts. It is vital to understand the intricacies and the features the tool will provide. Thus, before choosing a tool, it is a very good idea to bombard customer care and take note of every doubt you may have and also test the water of the level of support you’ll receive in future from that service.
A few of the mistakes new traders make is to watch a guide without paying much attention, not research the concepts and then use a different tool than in the guide without checking their differences. While expert traders can just make do with any tool and understand its processes in a short period, new traders should try to use the same software like the one used in the guide they follow. Taking a short course to learn about trading practices along with the tool is also a good way to learn how to best use the tool, learn from experiences of old-time traders and fast forward your trading career without experiencing the newbie losses.
How does Chart Analysis help you?
Getting a hold of past experiences, yours or others is the key in trading. Holding more and correct keys is the best way for a new trader to be successful. Only after learning and understanding can one make a good trade. Technical analysis is only one aspect to help traders do well. Our trading expert, Mr Umesh Sharma, with his personal experiences, has always made it a point and promoted the message to others— Never stop learning while trading.