10th October 2022
In today’s time, trading is something everyone wants to be involved in. From the middle-aged adults who have earned all the wealth they require for themselves and their families and are all set for retirement or have retired to the youth full of energy and zeal within them. Some people would wish to put time and effort into learning to trade, others for the experience, some to swiftly increase the value of their assets, and yet others to make money for themselves. However, it is not possible to begin trading immediately. To have a proper grip on the art of trading, a person needs to have a basic knowledge of it and stay updated with the market movements.
Technical analysis is your answer to ‘Market Movements’. It facilitates a person to understand the current market trends, movements, and trading opportunities and helps you forecast future movements based on the historical data of prices and volumes, current happenings, current scoops, and future needs, and assess the long-term performance of a company’s share. It also provides you with all the prospects to decide whether or not to invest in a company shares, where to invest, when to invest, how much risk can be taken, volatility in prices, etc.
To sum it up, the technical analysis focuses on the prospects of investing in a company based on real-time data, price, and volume, and not business results such as sales and earnings.
The concept of Technical Analysis, as we use it today, was first bought in the Dow Theory in the late 1800s by Charles Dow. There are various other researchers, though, who worked on polishing the theory into what we have today. Over time, technical analysis has grown to such a level that we have easy access to hundreds of signals, indicators, and patterns.
Indicators are mainly focused on detecting current market trends, their support and resistance points, and continuation patterns. Regularly used charts, patterns, and indicators include:
- Chart Patterns
- Candlestick Patterns
- Moving Averages
- Support and Resistance Points
- Price and Volume indicators
Candlesticks play a crucial role in market trend forecasting. The direction of candles makes way for decisions on putting or pulling the money from the market.
The other known essential indicators involved in the process of Technical Analysis include the:
- Pivot Points
- Fibonacci Retracement
- Moving Average Convergence & Divergence
- Relative Strength Index
- Bollinger Bands
There are many applications and websites available on the internet to practice the concept of technical analysis. To learn technical analysis, one must first need to learn the basics of stocks, markets, investing, and financial concepts. Once you know them, there are many courses available on online learning platforms to understand technical analysis.
Prateek Kumar Nanda
MBA Batch 2021-23