What is Technical Analysis?
Definition: The branch of trading theory that relies on the idea that equity prices can be forecasted directionally by using past price movements witnessed in past market data (primarily price and volume data). Technical analysis stands in contract to modern portfolio theory.
Technical analysis attempts to skip over the fundamental analysis steps of examining earnings, news, dividends and other market data and assumes that what other investors think about these events can be observed in equity prices, as other investors will trade on that information. Technicians use various methods including the study of charts to determine other investor’s sentiments. There are a variety of techniques that technitians use to study chars including Candlestick Charting and Elliot Wave charting.
Practitioners of the Theory: Those who subscribe to the ideals of technical analysis are known collectively as Technicians.
Market Characteristics Observed: Technitians use trading tools based on price movements, volume movements, moving averages, relative strength indexes, regressions, intra and inter market price correlations, stock market cycles and business cycles.
A variety of fields incorporate components of technical analysis, ie. quantitative analysis and behavioral economics.
Books to Check Out: For some more infor on Technical analysis, check out...
Categories:
Elliott,
Finance_Principals,
How_To_Trade,
Technical