Technical Analysis

Study Guide for Technical Analysis

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Have you ever seen movies where screaming people try to buy stocks? They look at screens filled with hundreds of numbers and names and earn or lose depending on the moment and the offer. They do not guess but use technical analysis. This process is time-consuming and overwhelming for beginners. Inexperienced individuals will never learn the technique without a tutor and samples.

College life might be exhausting. Lectures, labs, academic papers, homework, after-class activities, and relations with friends, relatives, and partners tear students apart. Technical analysis cannot be done in a couple of seconds because it involves statistics, comparison of results, and reasonable conclusions. Being not able to comprehend a single detail, students fail assignments connected with it. STEM experts from CustomWritings, an assignment help service, are on alert to sort out everything simply and perfectly clear.

This is a step-by-step guide to technical analysis in five easy and effective steps.

Step 1. What Is Technical Analysis: ABC Explanation for Beginners

Investors and traders are connected through complex relations. Both parties need information that helps them predict the market price the next day, in several months, and even in a year. The price difference is essential for profit-making. As a rule, they hire experts who analyze the income, trends, and system evaluation of a concrete organization or product. Technical analysis learns the history of previous prices and the volume of sold products to predict its floating in the future. In other words, its purpose is to help investors and traders draw profitable conclusions.

A student’s job is to learn and understand the psychology of the market. Learners must realize that technical analysis is the first step to this complex notion that is a part of behavioral economics. So, the main thing is to understand the value of technical analysis.

Step 2. Get Acquainted with Approaches

Just like Sherlock Holmes and Aristotle, a student can apply two thinking methods when preparing the technical analysis. 

  1. Deduction or from top to bottom
  2. Induction or from bottom to top

The first one prioritizes general information connected with macroeconomics. So, a learner must consider national and overall market factors like interest rates, employment, taxes, etc. This approach takes less time compared to the second method. Consequently, investors want to benefit as soon as possible. They evaluate the situation and then go into detail thinking about whether to invest or not. The disadvantage of this approach is in losing opportunities. Sometimes it is better to wait but get more, just like in the case with cryptocurrency. 

The second method is famous thanks to Arthur Conan Doyle. His outstanding character could investigate a crime thanks to details that led him to a general conclusion. So, a person needs to learn the peculiarities of a specific organization or a company first of all. It relates to finances, services and products, requirements, and other issues that promise its growth and progress over time. Then, it will be necessary to find out more about the sector it operates in and finish with macroeconomic factors.

A decent expert must be ready to provide both technical analyses for clients. Some of them like to get the whole picture to invest in the nearest future and improve the revenue over time.

Step 3. Get Ready for the Technical Analysis

The basis of the technical analysis involves three postulates:

  • The price is the reflection of all factors that influence it.
  • The prices always depend on trends.
  • The history is repeatable.

This step needs several substeps to understand the process.

1. Decide

A student should decide what method to choose. If the research paper requires both of them, it will be necessary to create a system for trading. The system is usually the reflection of prices within long and short periods. The pick of pricing signals about the high time to buy the stock while the drop in it tells about the selling time. The short-period line must go above the long-period line in the chart.

2. What are the Securities?

The research method must suit the stock that can be volatile, stable, liquid, and illiquid. So, a student must concentrate on parameters to be exact and provide a top-quality analysis that will result in profit without losses.

3. Learn about Trends

A person can create or study charts to find out the type of trend regarding the concrete price. It could be down, up, major, near-term, horizontal, intermediate. Besides, one must be aware of charts that reflect low, high, closing prices and their periodic movements.

When a person studies charts, he or she might notice pictures provided by price lines. They are always associated with the phase of a trend. So, these patterns help a person to find out whether the price will be stable, dropping, rising, etc.

Another thing to learn about trends is their validity. To find it out, a person needs to analyze such indicators as volumes of selling and buying. One needs to consider prices and a trend volume to see the correlation.

4. Oscillators and Indicators

Buy and sell opportunities are predicted by price fluctuations. The main indicator at this stage is the moving average. It can be linear, exponential, and simple. The oscillator is the fixed range of values.

Step 4. Involve Technology

Today, one can find various apps and software to cope with academic assignments. Technical analysis is not an exception. They can maximize the overall performance to guarantee the best results. For example, an average analysis requires smartphone alerts and one-click access to the trading platform. It is comfortable and keeps a person’s knowledge updated.

Step 5. Final Considerations

It is impossible to provide a thorough analysis without practice. Professionals recommend practicing first. One can use demo apps and accounts to try and only then create a technical analysis for real capital. It is also essential to use induction in learning. A student should try to put effort into small things to comprehend the basics. After that, a student will be able to provide decent technical analyses because experience matters, especially in such a complex assignment.

Techsprohub- team

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