Technical Analysis Lights Up Your Way of Trading

Technical analysis will help you to illuminate your path when entering the world of trading and investment that looks so attractive although it is not as easy as imagined. Investors and traders like you need a set of tools that will help you to achieve success in trading. Technical analysis will be a spotlight which will light up your way of trading and it is very useful for you, for instance when you must take accurate trading decisions and it will maintain your objectivity. You just need to know and study it more deeply.

In general, technical analysis is a study of price movements in a market like stocks and forex market. This discipline studies the price movements that have occurred and predicts future prices that will occur in certain markets. The highest and lowest value of a commodity, the patterns of price movements and trends are several things you learn from this kind of market analysis. In short, this analysis method studies the past to predict the future. Do not misunderstand on the “technical” word, this does not mean you need to have a technical background as an engineer; anyone with any educational background can study and master it.

Technical analysis is a shortcut to study and analyze a market. Unlike fundamental analysis where you have to learn several things such as economics, politics, financial statements, trade balance and so on, with technical analysis you only need to study charts and technical indicators such as moving averages, chart patterns and so forth. The basic idea of this market analysis technique is that price discounts everything. It means price is the ultimate result of any factors in the market. Therefore, you do not have anything to focus on but the price.

Joseph de la Vega’s of the Dutch markets in the 17th century was believed to be the oldest clue of technical analysis presence.In Asia, there was Munehisa Homma, a Japanese rice trader during early 18th century who developed candlestick charting techniques. Today Homma’s work is widely used as a main charting tool. In early modern day, Charles Henry Dow, the founder of Dow Jones Industrial Average and a well-know theory called Dow Theory, also known as the person who utilizes this market analysis method. It is said that nowadays approximately 80% of traders all around the world are technicians. So why don’t you be one of them? Remember that as a short cut in examining a market, technical analysis can help you to save your time and obtain more focus on the market.

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