What is Stocks Technical Analysis?
Stocks Technical Analysis Strategies
Stocks Technical Analysis is the science and art of forecasting future stocks price movement based on historical stocks prices combined with Stocks technical indicators. Stocks Technical Analysis Course - This Stocks Technical Analysis study often interprets the stocks price data by studying a stocks chart and looks for stocks chart patterns and stocks signals for buying and selling.
The history and origin of this Stocks Technical Analysis method dates back several hundred years to Japanese and Arabian markets, Stocks Technical Analysis involves using mathematical manipulation of stocks price data to optimize buy and sell points. The use of this type of Stocks Technical Analysis in modern computerized trading programs has become increasingly popular.
The information which the is studied and assessed is stocks price movement so as to plan an entry or exit into a stocks trade. The goal is to determine how the stock trading market is trending.
What Does It Really Measure?
This Stocks Technical Analysis - studies the supply and demand of a stocks instrument in an attempt to determine in what direction the stocks price will continue to move in.
While stocks technical analysis deals with stocks price and stocks indicators it is just a measure of investor sentiment.
What to Look For
Find the Stocks Trend
The motto of stocks technical analysis is: "the stocks trend is your friend." Finding the prevailing stocks trend will help you become aware of the overall direction and offer you better stocks trading opportunities - especially when shorter-term stocks market movements give conflicting signals.
Daily stocks charts are more ideally suited for identifying long-term stocks trends. Once you have found the overall trend direction then you generally open buy or sell orders in that direction.
Stock Trend or Range
No matter what stocks price is doing, it usually falls into one of these two categories. If the stocks price is moving in a pattern or in one direction, you can use stocks trend lines to analyze where the price should go. If the stocks market seems to be bouncing back and forth in a range, you can use support and resistance lines to make note of where to open buy or sell stocks trading orders.
One of the greatest goals of Stocks Technical Analysis studies and methods in the stock trading market is to determine whether a given trading instrument will move in a stocks trend in a certain direction, or if stocks market will move sideways and remain range-bound. The most common Stocks Technical Analysis method to determine this is to draw stocks trend lines which are used by traders to determine whether or not the current direction of the stocks market will continue. Many investors avoid trading in a range-bound stocks market and only buy or sell stocks when there is a stocks trend since this makes trading more predictable.
For stocks technical analysts the most important stocks tool is the stock chart. The purpose of a stocks chart is to provide a visual representation of stocks price quotes (drawn on the y-axis) against time (drawn on the x-axis) for stocks instrument, this stocks chart is used as a basis for making predictions of the future stocks price direction.
Stocks Trend Lines
The direction of these trend lines determines the stocks market direction. A stocks trend line drawn moving upward represents a bullish market and a stocks trend line drawn moving downward represents a bearish market.
Support and Resistance
Support and resistance levels are points on a stocks chart that tend to act as boundaries. A support level is usually the trough or low point on a stocks chart whereas a resistance level is the high or the peak point on a stocks chart. These support and resistance levels are used as buy/sell points.
Moving Averages Stocks Trading Technical Indicator
Moving averages stocks indicator are used to show the average stocks price of a stocks instrument over a given period of time. Moving Averages are called moving because they reflect the latest average in the movement of the stocks prices.
Stock Strategies
To be a successful stocks trader you need to come up with a stocks strategy. There is not one set Stocks Trading strategy that is good for all stock traders. But Rather, each stocks trader needs to develop their own stocks trading strategy.
Stocks Technical Analysis is the most widely used strategy in the stocks market and is used to decide the entry and exit points.
Market movements have identifiable repeating price patterns that have been studied over many years providing a thorough understanding of these stocks market trends and how they can be used to form the basis of a good trading stocks trading strategy.
There are many Stocks Technical Analysis tools available provided to facilitate this study
The beginner stocks trader is advised to study each Stocks Technical Analysis tool separately to get working knowledge of the concepts and application for each Stocks Technical Analysis study. Once you understand one Stocks Technical Analysis method, keep on using it while studying others. Each Stocks Technical Analysis tool tends to combine well when used with other Stocks Technical Analysis Tools.
Support and resistance levels are also used in many stock trading strategies. Support is defined as the level that is repeatedly seen as the bottom (floor) - when the price reaches this level it tends to bounce. Resistance level is the ceiling, the upper boundary (ceiling) that a stocks instrument rarely trades above.
Support and resistance levels are valid for a period of time, until they are broken, When the stocks market breaks through these support and resistance levels, the stocks price is expected to continue in that direction. For example, if the stocks market rises above the previous resistance level, it is seen as a bullish stocks signal and the bullish movement should continue upwards.
Longer stocks chart timeframes establish more stronger support and resistance levels. Stocks traders can use these support and resistance levels to determine when to enter a trade position or exit an open position.
Moving averages is another common stock technical indicator used as to create stock trading strategies. Moving averages try to smooth out short term stocks market price fluctuations giving a clearer picture of the stocks price movements and trends. Traders can draw SMA to determine stocks price movement tendency to move up or down - stock trend.
If stocks price crosses above the simple moving average then it will keep on moving up.
If stocks price crosses below the SMA then it will keep moving down
These are examples of stocks strategies that can be used individually or combined.
Stocks Traders use two or more Stocks Technical Analysis studies to determine when to open an order when both Stocks Technical Analysis indicators that they are using support the same direction. If several Stocks Technical Analysis indicators show that the stocks market is moving towards a particular direction the a stocks trader can trade with more reassurance than when he is only relying on a single Stocks Technical Analysis indicator.
Fundamental analysis should also be used together to reinforce Stocks Technical Analysis findings, or vice versa. A trader should ideally take into account two or more Stocks Technical Analysis indicators when developing a Stocks Strategy.
Every stocks strategy should provide clear guidelines about when to enter and exit a buy or sell stocks trade position, how much loss can be accepted if the stocks market moves in the other direction and how much profit is expected. Following these simple Stocks Technical Analysis guidelines can help you become successful in stocks.
