Technical Analysis Defined

By Michael Swanson

If you want a definition of technical analysis think of patterns that forecast market by the direction and study of earlier market performances. It mainly keeps track of volume and prices. This done by watching what happens in various markets for long period of time.

The Dow Theory has inspired the development of a modern technical analysis from the end of the 19th century. This is done by watching a particular item for a while on the market. A price pattern will emerge.

Once the price pattern has been established one can then exploit that pattern to earn more money. Understanding and using the information will result in an increase in revenue. This is used mainly with traders and financial professional.

The stock market items from the past will tell us what the future is going to do. People follow this to learn what they need so they can decided what to buy and sell. This is a good method to use for most people.

When people know when the stocks are going to rise and fall they can sell off so they don't go broke. But this is not an exact method and can still lose money if relied upon as a sole source for the stock market.

A wide variety of charts is used to watch what has been taking place. There are long-term view charts and short-term view charts that the analysts use. Once they watch them long enough they use the information to trade or invest in an item.

There are experts on this theory, books and classes to teach people this way of investment. However some people think that this theory is not sound enough to use on a regular basis. The approach that is used is called a top-down approach. The information that is gathered can be complex or can be simple. There is a method that is followed by all that use this theory. - 32163

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