Observing the movement of forex charts and using chartpatterns and recurring chart shapes in the market to make buying or
selling decisions in the market and Best Trading Mentoris often considered an art. Technical analysis which is also called
" chart analysis" or "chartist analysis" is an
approach that assumes that financial markets and their prices are directly
related to the psychology of the participants in the exchange (traders) more
than to other factors. such as health economy for example.
How does technicalanalysis work?
If you ask yourself the question " how doestechnical analysis work? ", then we can answer you that in its
simplest form technical analysis is simply identifying the trend of a
market . The course of the financial markets usually forms highs and
lows, when drawing lines between these points strategies have obtained trend
lines, supports and resistances.
If we extend these lines slightly, we obtain pricelevels on which prices are likely to rebound in the future. The conclusion
of all this is that by practicing technical analysis, by tracing on the graphs
of the financial markets, it is possible to identify the key points where one
will have to buy or sell the market.
Are the graphs easy tointerpret?
Often they are. However, effective technical analysisoften involves spending several hours studying the charts and trying to find if
certain things matter and are likely to influence the trending movement of the
market, such as the crossing of a round price level .
You should know that the study of Japanesecandlesticks makes it easier to interpret the graphs, for example we will
easily spot on the graphs recurring figures such as hammers , hanged or heads
and shoulders. By spotting these kinds of shapes we will be able to
determine if a continuation of the trend is likely or rather if a trend
reversal is about to occur.
Are there other tools touse?
In addition to the course represented graphically, themajority of private traders have the habit of grafting technical
indicators to it . By doing so, they obtain more information relating
to the traded market as well as alerts and signals to buy and sell which tell
them when to take action, which confirm or invalidate their investment
decisions. In addition to these technical tools widely discussed on online
trading forums, intermediate and experienced traders generally like to
pair fundamental analysis with technical analysis.
The perfectly studied technical analysis can be mastered andbear fruit, however it is not complete. In order to better analyze the
financial markets and take advantage of them, experienced traders generally
combine technical analysis with fundamental analysis. Although the
differences between technical analysis and fundamental analysis exist, it
is important to note that this second approach brings elements ignored by
technical analysis and takes into account the announcements of the economic
calendar . Indeed, the limits of technical analysissometimes
pose problems and that is why it is advised in trading manuals to use the two
major forms of analysis in order to best exploit the Forex market.
When you start in the stock market and in technicalanalysis, you try to know where you are stepping thanks to indicators. At
the same time, one wonders which are really interesting to use, which give the
best results and especially if there is an indicator which dominates them
all? MACD, Stochastic, RSI, ADX, we balance volume…hop, hop, hop.
Before you start making a gas plant, and wasting yourtime analyzing which indicator gives the best signals, tell yourself that no
indicator will be reliable in telling you the best time to buy and the best
time to sell. . There is no such thing. In the end, on the stock
market, all that matters are the prices!
Yes, I consider it much more important to learn how toinvest according to prices rather than according to indicators. I don't
see indicators as a way to predict but rather as a way to confirm. Only
the evolution of prices, gives me buy and sell signals. The indicators
allow me to confirm.
So put aside all those exotic indicators, and concentrate onstudying the price chart.
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