Why Technical Analysis Matters
by Michael Kahn
Technical analysis is a bit of a misnomer since it is really not that technical. A better name for the use of charts to make investment decisions might be risk/reward analysis or even market psychology.
Sure, there are some complex mathematical concepts involved with some of its more esoteric indicators. But at its core, technical analysis is simply a method of determining if a stock or the market as a whole is worth buying or selling. Once we identify this we are way ahead of the game with regard to assembling a winning portfolio.
In this article
- What Is Technical Analysis?
- How It Works
- Step-by-Step: The Theory
- Step-by-Step: The Process
- Fundamental Versus Technical Anlysis
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What Is Technical Analysis?
Simply stated, technical analysis is the study of data generated from the market and from the actions of people in the market.
Such data includes price levels that have served as turning points in the past, the amounts of stock being bought and sold each day (volume), and the rate of change of price movements (momentum) over a given span of time.
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