The stock market is one of the most popular financial markets available in the world. Because of the money making opportunities that stock market offers people, who wouldn’t want to trade in this financial market?
There are so many opportunities that can make your dream come true when you trade in the stock market. It is a fact that people who succeeded in the stock market became millionaires almost overnight. With this kind of opportunity, you would really want to invest in this kind of financial market.
Stock market is like buying a portion of a company expecting the value of the stock to rise. Once the company rises, you can sell it back and gain profit. In simpler terms, all you have to do is buy low and sell high.
This may sound simple enough, but the stock market is a very unpredictable market and many people have lost their investments by making the wrong decision. However, if you have tool that can help you with your decisions, such as a technical analysis chart, you can really make the right decision and minimize the risk of losing money and maximize the chances of profiting.
Technical analysis is the art of predicting the stock market’s future by means of studying the past events that happened in the chart. A chart may be a series of line charts, bar charts or candlestick charts.
By far, the line chart is the simplest chart to read. However, it doesn’t contain all the information that you will find in a bar chart and a candlestick chart.
Technical analysis, will definitely guide you in your stock trading. It will literally give you a glimpse of what may happen in the future with the stock you are holding. However, this kind of tool is considered more as an art instead of science. This is why many people are still skeptical in using this tool alone.
However, many people also consider technical analysis as one of the most important tools in the stock market. By comparing fundamental analysis and technical analysis, people may arrive to the right conclusion on where the market will likely go.
You should know that technical analysis, unlike fundamental analysis, doesn’t concern itself on the political and economical issues on why the stock moves. It is only concerned with the actual stock movement itself. This means that it uses the price trend in the charts to predict the future.
It relies on history to predict the future. It assumes that history will repeat itself. So, by studying how a particular stock moves, it can predict when the next move will be. It can tell you if the stock price will go up, down or will not have any significant movement.
By this prediction, it can really help you make your decision on what to do if the time came. You will be minimizing the risk of loss and really maximize the potential profit by just taking a look at technical analysis of stocks.
However, you should always remember that technical analysis isn’t always 100% accurate. This means that you should also make a study of your own about a particular stock in order to support the findings on technical analysis. You can also compare the fundamental analysis and the technical analysis in order for you to make sure with your decision.