Technical Analysis: The Introduction

 

So friends, with this post we are starting our most awaited event "The Technician: From Beginner to Expert"

As I already promised we will be starting from zero so this post will be explaining what technical analysis is all about and as you follow our posts regularly you will be learning new concepts in the field technical analysis every other day. You will rise from a beginner to expert.

In the journey I will be mentioning all the tools you would require to start with the stuff yourself and for doubts I will be there for you always. Let's begin it...

The definition:

If someone asks me what is technical analysis, I would simply define it as "The study of market action through use of charts". 

"Market Action" would include both rise and fall in price, change in volumes, overall trend of the market etc. and charts are nothing but the graphical representations of this price movement digitally or on a piece of paper.

Assumptions:

Technicians assume anything that can affect the price of a stock i.e. the profits, the return on equity, the business model, sales, expansion projects, investor sentiments etc. are already reflected in the price of the share so all we need to look at is the way the price moves.

Technicians don't trade on news, they trade on the way people react to news and it is already reflected in the price of the stock. Recently, Ybrant Digital came up with good results yet the stock fell around 25-30% in a few sessions, the reason behind this were not the results but the way people perceived the results. People might be expecting even better results so they were not satisfied with good results the company came up with and hence the stock tanked. So, our objective with learning technical analysis will be to spot how people react to different news and trade on it.

Technical Analysis vs. Fundamental Analysis:

• Fundamentalists study cause, while technicians study effect. Technicians just need to worry about the way the price is moving not for the reasons which are causing the price movement.All trader's classify themselves into technicians or fundamentalists but practically they need to have knowledge of both 
• Fundamentals take time to get reflected on price while the technicals are reflected in price quickly. So, if you are looking for quick money or hot money then technical analysis is your stuff
• You can trade solely on basis of technicals and get good results but trading just on fundamentals can't guarantee you quick results unless you are ready to hold your stocks for real long term
• Technical approach is simpler to use and learn as compared to fundamental approach as charts are readily available while going for in-depth fundamental analysis can be an issue for retail investors

Final words:

So, guyz to be simple and to the point technical analysis is a way to predict the upcoming price movement check the past movement of price and once mastered you will be able to do it yourself. In this series I will be covering each and every aspect of technical analysis mentioning the free softwares, websites, tools etc. that you will be using on the way and as you learn these aspects slowly and steadly you will a pro technician because this is a skill which is learnable which I learnt once, which the other successful traders learnt.

No one was born with the knowledge, all have acquired it some point of time and now its your turn to acquire it and become an expert technician and this particular series is designed specially for you people. It will be kind of online course you will be pursuing.

In our next post we will be learning about Dow Theory. Stay tuned!

Abhishek Ninaniya

Multiplier Wealth