Technical Analysis: Trading Strategies by Technical Analysis

Course Description

Technical analysis, as opposed to fundamental analysis, focuses on the examination of price and volume. Fundamental analysis aims to estimate a security's worth based on business performance such as sales and earnings. Technical analysis methods are used to examine how variations in price, volume, and implied volatility are affected by supply and demand for securities.

Technical analysis is frequently used to produce short-term trading signals using various charting tools, but it may also be used to improve the assessment of a security's strength or weakness about the larger market or one of its sectors. This data aids analysts in bettering their overall valuation estimate.

Any security with past trading data can benefit from technical analysis. Stocks, futures, commodities, fixed-income, currencies, and other securities fall under this category. We'll use stocks as examples in this course, but keep in mind that these concepts can be applied to any sort of security. Technical analysis is far more common in commodities and FX markets, where traders are more concerned with short-term price swings.

Technical analysts consider the following main sorts of indications in general:

1) Trends in prices

2) Patterns on the graph

3) Indicators of volume and momentum

4) Oscillators

Fundamental analysis and technical analysis are the two main methodologies for analyzing stocks and making investment decisions. The technical analysis considers that a security's price already reflects all publicly accessible information and instead focuses on a statistical study of price movements, whereas fundamental analysis examines a company's financial documents to establish the fair worth of the business. Rather than studying a security's intrinsic features, the technical analysis aims to understand the market sentiment underlying price fluctuations by looking for patterns and trends.

Charles Dow published a series of editorials delving into the theory of technical analysis. Two essential assumptions in his articles have since been the underpinning for technical analysis trading.

Markets are efficient when values indicate elements that affect the price of an asset, yet

Even seemingly random market price fluctuations appear to follow discernible patterns and trends that tend to repeat themselves over time.