The pandemic gives us plenty of time at home in the company of our screens. What better way to utilize the time than to grow your money? With advanced tech and AI assistants, stock trading is a cakewalk. But not without its own set of intimidating jargon and confusing technicalities, having a few tricks up your sleeve helps you climb the rungs easily. Stock market trading using technical analysis can be one of your routes to financial freedom.
The technical analysis identifies future trading opportunities and the price of stocks from records of price charts and recurring patterns. The main goal here is to identify the right time to enter and exit the market. Unlike fundamental analysis, which focuses on the value of an asset based on its sales and earnings, technical analysis emphasizes price action and volume.
Why choose technical analysis?
Technical analysis is your GPS to stock trading. Technical analysis relies on statistical tools called technical analysis indicators to help you trade. A technical analysis indicator points you in the direction the market is headed. Some of the commonly used technical analysis indicators are Relative Strength Index (RSI), Money Flow Index (MFI), stochastics, moving average convergence divergence (MACD), and Bollinger Bands. They are used individually or in combinations to analyze data, charts, trends, and patterns to generate signals. These signals indicate the ideal course of action, whether to buy, sell or hold an asset, leaving you with the choice to take a call.
Here are a few more reasons to invest your time in technical analysis –
Accurate market analysis
Technical analysis provides a prominent picture of the market action, and analyzing charts is the straightforward route to this outcome. It revolves around numbers and doesn’t consider the human element governing market trends, thus increasing precision and avoiding emotional fluctuations. The pandemic saw the market oscillating between trends, having a system that produces stable results based on historical data, saves time, and helps make informed decisions.
Simple and quick results
Technical analysis disregards fundamental factors and is based on demand dynamics. If value-based or economic assessments of businesses confuse you, technical analysis is your best foot forward in trading. To recognize patterns and understand the strategy from charts, you need no formal training. MACD and RSI are two of many technical indicators that analyze the information for you and give conclusive data based on mathematical deliberations. With the right learning even beginners can make use of different tools to trade effectively following technical analysis strategies.
Easy to use tools for beginners and experts
You can use several handy tools to analyze charts and generate signals to decide when to buy and sell. Overlays and oscillators are the two basic types of indicators. These can be used in different combinations to understand the market deeper and trade wisely. In addition, online courses and webinars offered by stock market experts are reliable resources you can access in minutes for trading strategies and tips. If you are a self-learner, there is no better time to get started on stock trading.
Adaptability across platforms
Technical analysis can be used on any trading instrument at any time, be it stocks, commodities, interest rates, or forex. This means you can always make decisions guided by the big picture after analysing information from all channels. In addition, the different trend indicators also offer various methods to scrutinize data instead of following a one-size-fits-all solution.
Technical analysis, although a tried and tested model for trading, is not free from criticisms. Its foundations are based on the belief that history repeats itself; while this may be true in most cases, predicting the future based on the past has its risks. Having a significant number of traders using technical analysis to place their bets on stocks also means that predicting the trends might also be what causes them. Some analysts thus conclude that technical analysis is a self-fulfilling prophecy. Despite these, technical analysis has a high success rate. With the pandemic, uncertainties are running high, yet technical analysis proves to be an efficient strategy for trading. Consider this is your wake-up call to diversify your income by mastering the art of trading.
Here’s why you should trade
Having a passive source of income gives you the freedom to take risks without worry. Be it for your next career transition, an academic pursuit, or a trip around the globe. So, begin stock market trading to plan a return to the new normal with new financial sources. With technical analysis, making informed decisions in trading is simpler. Yet, it is easy to be overwhelmed and tricky to navigate many indicators. Trade2Transform is your ticket to a hassle-free trading experience, making learning simpler. They offer beginner, midlevel, and expert training courses on stock market trading. Book an appointment now for a free consultation with experts on your path to a secure future.