Technical analysis or AT graphical and mathematical analysis of price trends has become. Stock Trading strategies Essential in recent decades, both among market professionals and among seasoned individual investors. It consists of the study of the market action of a financial asset (shares on the stock exchange. Equity index such as the CAC 40, bonds, cryptocurrency, currency, precious metal, raw material, etc.).

Conditions And Assumptions of Technical Analysis

Technical analysis is valid and relevant in any market situation where the meeting of supply. And demand for a financial asset is entirely free if transactions are under constraints, technical analysis is not valid. And sufficiently liquid (the financial asset must be treated often enough and by actors. With various financial purposes reports the French Association of technical analysts to reference association of the discipline in France.

Benefits Of Technical Analysis

Technical analysis makes it possible to overcome the shortcomings of imprecise financial analysis. Indeed, if the price targets of financial analysts are determined precisely via the results of different valuation models, the assumptions used (expected trajectory of turnover, margin rates, investments, discount rate are random, to say the least. This explains why the price targets of financial analysts are often very far from each other.

How To Start A Technical Analysis?

You must first determine your time horizon (intraday, short term, medium term or long term), then, over this period of time, define what the trend is. In the case of a trending flat, the idea is to buy at past major lows and sell at past major highs. If a trend is bullish, it is better to avoid shorting (“shorting”), because it is not advisable to bet against the trend is your friend “the trend is your friend.

Technical Analysis Tools

To carry out technical analysis, there is first of all the graph (chart) of the evolution of the courses, the most widespread representations being that “in Japanese candlesticks (candlesticks)” – method of representation of the courses focused on the high point, the low point, the opening price and the closing price for a given period (day, week, month, year, hour, etc.) – and the so-called “online” method, which consists of linking the closing prices.

There are also the usual different configurations (price figures or patterns): trend reversal structures (head and shoulders, double-dip, double-top, etc.), and continuation of the pre-existing trend.

Technical Analysis Definition The Points To Remember

In this article, I have mainly highlighted the benefits of technical analysis. Of course, this method also has drawbacks. Here, I only mention the main ones according to the definition of technical analysis.

Choose Your Technical Analysis Software

To do a good technical analysis, using reliable technical analysis software is essential. The LYNX trading platform has many tools for self-drawing support, resistance and trend lines for a technical approach to price charts. Indeed, the software has more than 80 technical indicators. I will come back to these indicators in detail in a future article.

Trade Stocks Using Technical Analysis

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