What is Technical Analysis?
Technical analysis is the study of stock indexes price charts so as to learn how to predict stock indexes price movements in the stock indexes trading market.
Technical analysis uses historical stock indexes price chart data to predict the next likely movement of the stock indexes price trend.
stock indexes trading technical analysis also include the use of various stock indexes price patterns that can be identified on the indices charts by stock indexes traders. These stock indexes price patterns are identified as commonly repeating stock indexes price patterns that can be used by stock indexes traders to predict the next likely market movements based on the technical analysis of these commonly repeating chart stock indexes price patterns.
Traders then come up with various indices trading strategies that incorporate these technical analysis methods in their indices trading plan and then use these strategies to generate stock indices signals and determine when to buy a indices , when to open a sell indices trade and also when to close a indices trade position.
Technical Analysis is Based on 3 Factors Common in the Indices Trading Market:
1. Indices Price Moves in Trends
Indices Price movements follow indices trends. This means that after a indices trend has been established, the future market stock indexes price movement is more likely to be in the same direction as the indices trend than to be against it. Most indices trading strategies are based on this technical analysis concept.
2. Indices Price Discounts Everything
Technical analysis only considers stock indexes price movement and assumes that, at any given time, stock indexes price reflects everything that has or could affect the stock indexes price including a country's economy and even the fundamental factors. This only leaves the study of stock indexes price, which is a product of the supply and demand for a particular indices instrument in the stock indexes trading market.
3. History Tends to Repeat Itself
History repeats itself mainly in terms of stock indexes price movement. The repetitive nature of stock indices market movements is attributed to indices trader psychology; in other words, indices trading participants tend to provide a consistent reaction to the stock indexes trading market most of the time. Technical analysis uses indices chart patterns to analyze these chart stock indexes price movements. Although these indices charts represent historical data they are still relevant because they illustrate stock indexes price patterns that often repeat themselves.
List of All Indices Indicators
Understanding this stock indexes trading technical analysis in indices trading can be a valuable tool in determining the indices trend of any market and assisting with entry and exit levels for your stock indexes trades.
The goal of these technical analysis methods is to help indices traders determine when a market is trending, and when it is not. If the indices price is moving in one particular direction, then we want to be on board. If it is not, all you are going to do is lose money as you will get whipsawed around and this is not what we want as investors.
Unfortunately, many indices traders fight the indices trend and buying/selling in the opposite direction of a this market indices trend direction, trying to pick a top or a bottom, only to see the stock indexes trading market move further in the direction of the indices trend.
Another common mistake indices traders often make is adding on to a losing position, averaging a loss. This is not a good indices trading strategy especially in a strongly trending stock indexes market. It is something that experienced indices trader never do. The indices trend is your friend, never go against it.
stock indexes trading technical analysis studies alert indices traders of setups and there are no certainties in financial market. Profits come from using proven indices trading strategies and methods to find a trending indices market and taking trades in the same direction as that of the indices trend.
