What's Technical Analysis?
Technical analysis is the study of stock indices trading price charts so as to learn how to predict stock indices trading price movements in the stock indices trading market.
Technical analysis uses historical stock indices trading price chart data to predict the next likely movement of the stock indices trading price trend.
Stock indices technical analysis also include the use of various stock indices trading price patterns that can be identified on indices charts by stock indices traders. These stock indices trading price patterns are identified as commonly repeating stock indices trading price patterns that can be used by stock indices traders to predict the next likely market movements based on the technical analysis of these commonly repeating chart stock indices trading price patterns.
Traders then come up with various indices trading strategies that incorporate these technical analysis techniques in their indices trading plan and then use these strategies to generate stock indices signals & detect when to buy a indices , when to open a sell indices trade & also when to close a indices trade position.
Technical Analysis is Based on Three Factors Common in the Indices Trading Market:
1. Stock Indices Price Moves in Trends
Indices Price movements follow indices trends. This means that after a indices trend has been established, future market stock indices trading price movement is more likely to be in same direction as the indices trend than to be against it. Most indices trading strategies are based on this technical analysis concept.
2. Indices Price Discounts Everything
Technical analysis only considers stock indices trading price movement and assumes that, at any given time, stock indices trading price reflects everything that has or could affect the stock indices trading price including a country's economy and even the fundamental factors. This only leaves the study of stock indices trading price, which is a product of the supply and demand for a particular indices instrument in the stock indices trading market.
3. History Tends to Repeat Itself
History repeats itself mainly in terms of stock indices trading price movement. Repetitive nature of stock indices market movements is attributed to indices trader psychology; in other words, indices trading participants tend to provide a consistent reaction to the stock indices trading market most of the time. Technical analysis uses indices chart patterns to analyze these chart stock indices trading price movements. Although these indices charts represent historical data they are still relevant because they illustrate stock indices trading price patterns that often repeat themselves.
List of All Indices Indicators
Understanding this stock indices technical analysis in indices trading can be a valuable tool in determining the indices trend of any market & assisting with entry and exit levels for your stock indices trades.
The goal of these technical analysis techniques is to help indices traders determine when a market is trending, and when it isn't. If the indices trading price is moving in one particular direction, then we want to be on board. If it is not, all you are going to do is lose money as you will get whipsawed around and this is not what we want as investors.
Unfortunately, many traders fight the indices trend and buying/selling in the opposite direction of a this market indices trend direction, trying to pick a top or a bottom, only to see the stock indices trading market move further in direction of the trend.
Another common mistake indices traders often make is adding on to a losing position, averaging a loss. This is not a good indices trading strategy especially in a strongly trending stock index market. It is something that experienced index trader never do. The indices trend is your friend, never go against it.
Stock indices technical analysis studies alert indices traders of setups & there are no certainties in financial market. Profits come from using proven indices strategies & methods to find a trending indices market and taking trades in same direction as that of the indices trend.
