Why you definitely should learn technical analysis

[Music] power [Music] why you definitely should learn technical analysis what's that another topic to study oh god all this investing is so complex and complicated why don't they teach it at school well that's a really good question we completely agree that financial literacy should be taught widely but anyway at school or on your own to become a successful investor you have to learn a lot of things and technical analysis is one of them why let's find out what is technical analysis it's a method that helps you to evaluate investments and identify trading opportunities based upon market data in other words technical analysis allows you to predict the probable price movement of security through the use of technical studies and indicators technical analysis can be applied to almost anything that has a history of trading remember those price charts you find here and they're on exchange websites they are the main thing you need for your research technical analysis is based on mathematical chaos theory don't be repelled by the chaos part technical analysts view the markets as chaotic but they believe that prices are not random and there are patterns that tend to repeat in fact adepts of the technical analysis build their decisions on a number of populations price knows it all prices reflect all the information about security and any new facts related to this security will affect its price the trend is your friend there are observable trends in the price of securities and prices tend to go in the same directions up to a certain point of course history is the key to the future what happened to the price of security often repeats so the pattern seen in the past can give a hint about what's going on now or in the nearest future why do i need technical analysis it seems to be a bit like forecasting isn't it better to take a look at the overall state of the economy or analyze a certain company's situation before investing well here you talk about fundamental analysis that is also important but doesn't give you all the answers quick reminder there is no tool method or strategy that has all the answers and leads you straight to wealth nevertheless technical analysis can give you a hint about when to enter the market which stock to buy and which to get out from when to book profit it can help you deal with emotions that often push investors towards bad decisions if you detect a developing trend you can plan your moves with at least a bit of certainty what will i have to learn are historical price charts the only thing to look at while doing technical analysis sorry no that would be too easy although there are investors who make decisions with the help of a simple line chart we recommend going a bit deeper first of all you'll have to learn to read and understand all types of charts candlestick charts by charts renko charts and point and figure charts each type has its own benefits for example candlestick charts are good for showing volatility information for longer periods of time while point and figure charts are used to determine entry and exit points another important thing to get familiar with besides the prices is volume a volume is a number of shares or contracts that trade for certain security over a chosen period of time it gives us the key to the significance of changes in a securities price next let's not forget about trends to successfully identify a trend you need to know how it looks otherwise you'll bump into it without noticing some of them have funny names like head and shoulder or cup and handle but simple triangles are useful too then there is a long list of indicators or signals that you can use for making a certain move their names aren't so funny they are more on the boring or scary side depending on what you think about math but the good news is that even a stochastic oscillator or a fibonacci retracement is not so complicated and can be easily understood by everyone are there any downsides to technical analysis reading and comparing charts can do no harm however it would be unwise to base your investment decision only on technical analysis remember the trend is your friend a phrase it has a continuation until the end when it bends that means technical analysis has a lot of uncertainty it takes a lot of work but also a bit of luck to pick the right moment for entering or exiting an investment one can hope that the trend repeats itself exactly but sometimes it just doesn't what's the bottom line technical analysis is a widely used tool that combined with other tools can help you make good decisions at least one reason for learning it is that technical analysis tends to self-fulfill due to its popularity if a number of investors anticipate a price movement and act accordingly this price will be forced to follow this trend even if there are no other reasons for this that may sound strange but hey why shouldn't you profit from it so give your brain a workout and let technical analysis provide you with all the possible hints that's all for today's video i hope you find it interesting and helpful let me know what you think about technical analysis in the comments below thanks for watching and don't forget to subscribe so you don't miss any of our new videos you

Channel: FiXplainer

Views: 166

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Id: msn8vOYhoFk

Length: 5min 45sec (345 seconds)

Published: Sun Oct 03 2021