What is Technical Analysis in the stock market?
Every country has own stock market, in which securities of companies of that country are traded. The stock market of any country is the biggest volatile market among other markets. For succeed in this market one should have deep knowledge and experience of every trend, opportunities, timings of trade, and level of fluctuation of the stock market. For this purpose, we should make a detailed research work on market trend simply this research is called “Technical Analysis”.
Technical Analysis is not a formula it is a technical research in which we observe every movements and fluctuation of the stock market, identify trade opportunities, and evaluate the results of our research in terms of profit or loss based on activities of other market players and investors. Like all other Analysis, Technical Analysis also has some assumptions and during this analysis, we need to follow these assumptions.
How can we take a better entry with the help of Technical Analysis?
Every investor wants to make a good profit by trading in the stock market but it is not so simple task. For making a fruitful gain in the stock market, we need to know all parameters and weapons of Technical Analysis. If we use this analysis in a good way, then the result will be in a gain. And if don’t know to use of Technical analysis then this cause in a heavy loss that may be irrecoverable for us.
Major cautions should be kept in mind when using Technical Analysis-
- When using this analysis we keep main assumptions in knowledge.
- All the results gained by this analysis should be put on a chart or table so that trends are properly visible.
- Technical Analysis is mainly used for short duration trades.
- There are entry and exit time that are major viewpoint for succeeding in the stock market. So the timing of entry or exit is always kept in mind.
- Technical analyses show only a trend and not show the exact result of our investment.
Various methods, theories, and models used in Technical Analysis-
- Single Candlestick Patterns
- Multiple Candlestick Patterns
- The Support and Resistant Model
- Moving Averages
- Dow Jones Theory
- The Fibonacci Retracements
Advantages of Technical Analysis-
- Informative– This technique provides all information regarding share and share market like share prices, high-low prices, average prices, fluctuation of the given period, and trend existed and followed by other participators.
- Predictor– This technique provides us the time for entry and exit from the market. It saves investors from major negative fluctuations of the stock market.
- Simple and easy– The Technical Analysis is not required a high technical mind to research the market trends. This technique is simple and easy to understand and recognize.
Disadvantages of Technical Analysis-
- Trends only and not exact figures- In technical analysis, only trends are shows that are based on other investor’s activities.
- Biased Opinion- Due to various methods and assumptions, results of one analyst may be different from other analysts. In some cases, the results may be biased.