|
Technical Analysis
Have you ever heard about
Fibonacci, moving averages or
candlestick charts? These are some
of the basic tools of technical
analysis. Technical investors
believe that all information about a
given population can be transformed
into part of the review of its past
and current statistics, as the trend
of stock trading volume and stock
price chart (Chart value of shares
changed over time). Then,
mathematically analyzed the behavior
of graphics and use of statistical
analysis can identify trends
indicate that the future behavior
of prices.
There are three basic assumptions of
technical analysis. The first is
that stock prices reflect all that
you need to know; so that technical
analysts believe that the main
factors and market psychology is
already at a price in the price.
Secondly, technical analysis
suggests that the stock price moves
in trends. This means that following
the trend of further development,
are more likely to continue in the
same direction as against him.
Lastly, technical analysis, is
largely based on the assumption that
the historic nature as to repeat it.
In other word, this means that
investors usually react more or less
equally to similar events in the
market.
Although it may seem simple, there
are almost an infinite number of
mathematical methods and tools of
technical analysis. Most technicians
will first try to determine the
overall trend of price changes, to
determine whether this trend upwards
or downwards. The mathematical model
describing such as moving averages,
oscillators and other indicators are
a tool with which technical investor
for the purposes of this analysis.
Then, investors are beginning to
understand the smallest detail in
the trend and see if there is
support or opposition to this trend.
For example, the upward trend with
support for the volume of trade can
be a good indicator of share prices
continue to rise. This may be a good
time to buy shares. On the other
hand, if there is strong resistance
against the upward trend, this is a
good time to sell the stock.
Technical analysis is not easy and
certainly not absolute. In addition
to technical investors want to know
more details. They also want to
know, for example, the particular
form of graphic design, but they can
be considered as a form of head,
shoulder, cup or even a pen.
There are many debates both in
academia and the private world on
the ability of these methods in
order to beat the market methods.
Studies typically show that
technical analysis does not work in
the long run, but it is much harder
to prove that in the short term,
since many of the technical analysis
of the findings are not conclusive.
|