Basics of technical analysis that will help you make money on the stock exchange
Technical analysis is the tool that is used to study the behavior of the price of an asset on the stock exchange.
Moreover, it doesn’t really matter what you are going to analyze - the stock market or forex, the trend movement occurs under the influence of the same factors.
Therefore, if you have studied technical analysis while working on one of the exchanges, you can successfully apply it in other markets.
The basics of technical analysis are designed to give the novice trader basic knowledge of how this process works and what tools are best to use to improve work efficiency.
It would also be a good idea to learn about the orderliness of the work and the correct formulation of conclusions based on the data obtained. So, what is the basis of technical analysis?
What are the basics of technical analysis based on?
1. Setting goals .
You must clearly know what information you want to obtain during the analysis process - this can be either determining the trend direction or calculating the magnitude of the correction and the likelihood of its occurrence.
The choice of execution tool (technical indicators) will depend on the task at hand. 2. Selecting a time period .
It is also included in the basic principles of technical analysis, because it is quite important which time frame to analyze and how suitable the information received will be.
For example, why do you need to know how the price behaved during the week if you are going to trade on M5? In this case, studying the chart of the currency pair for M1, M5 and M15, or maximum M30, is more suitable for you. It is on these timeframes that you will receive all the necessary information. 3. Technical analysis methods
It is important how you analyze the existing trend, build support or resistance lines, determine price levels or identify graphic patterns.
Read more about this stage at the link above. I personally prefer to use price channels or define significant levels, but you may prefer another option. 4. Conclusions .
After carrying out any work, conclusions should be formulated, and our case is no exception.
But in order to draw the right conclusions, you need to apply the data obtained. For example, if you have identified that there is an upward trend in the market, and the previous correction has only recently ended, then you can open a buy trade. In the process of carrying out work, it is important to have the necessary knowledge base, without which it is quite difficult both to carry out the analysis process itself and to draw the necessary conclusions; you will find them on other pages of our website.
Technical analysis is a complex discipline, so if you want to make your life a little easier, use ready-made Forex strategies or at least technical analysis indicators ; some of them even give signals to open transactions.
Read other articles about technical analysis in the section - https://time-forex.com/tehanaliz