Technical Analysis for Beginners Made Easy
To find the direction of transactions in the foreign exchange or stock market, two types of analysis are used - technical and fundamental.
And if at first glance trading based on news seems as simple as possible, difficulties always arise with the use of technical analysis.
But the reason for these difficulties is that a novice trader immediately faces the most complex methods of technical analysis.
Which require lengthy study, and in practice are not always effective.
Technical analysis for novice traders involves the use of simple techniques with which you can quickly assess the current state of the market.
Techniques of technical analysis for a novice trader
The main task when studying the market is to determine the current location of the price and forecast the direction of its movement.
At the same time, there are several simple axioms that help to do this:
Minimums and maximums – by analyzing the chart of any currency pair, you can quite easily determine the minimum and maximum price values:
And based on them, draw a conclusion to what extent the price is currently at a particular point.
The closer the current rate is to the local minimum, the higher the prospects for a reversal and price growth. Conversely, if the price indicator approaches the maximum level, this may indicate a high probability of a decline.
It should be noted that the minimums and maximums serve only as a guide, since depending on the trend, the price can form new extremes.
For greater clarity, it is better to use the price channel. Price channels are a corridor in which the price moves for some time. It is built on the basis of several minimum and maximum points:
This construction allows you to track the dynamics of movement and, based on it, determine successful entry points into the market.
The most common strategies in this case are breakout and inside the channel.
The channel breakdown strategy assumes that if the price, after crossing the border, passes more than 100 points, then its movement will continue. It is described in more detail here - http://time-forex.com/strategy/strategiya-proboj
At the same time, the trading strategy inside the channel assumes that the price will continue to move within its boundaries, making reversals.
Among other things, the price channel serves as an excellent tool for technical analysis as it allows you to determine the direction of the trend and the current volatility of the market.
Correction is also a fairly simple technique that can be included in technical analysis for beginners:
It is quite difficult to determine how long this or that trend will last, but we can definitely say that after it there will be a correction.
To start working, you should wait for a strong and sharp price movement, no matter in which direction, then wait a while and open a deal with the beginning of the correction.
It is important that the main movement is at least several thousand points for a five-digit quote.
Other simple techniques of technical analysis include:
- Gap strategy - http://time-forex.com/strategy/strategiya-gep
- Strategy using the Stochastic indicator - http://time-forex.com/strategy/strategiy-stohastik
And some other trading options that do not require long training.
Technical analysis for novice traders allows you to achieve maximum efficiency in the first months of working on the exchange. Its main principle is ease of understanding and application.