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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Discussion
I have been a Corning fan for years - your thoughts please
posted about 1 year ago by Edward from New York
If someone is seriously interested in Technical Analysis of stocks, I recommend the "Learning Article" on the DecisionPoint web site - excellent introduction.
http://www.decisionpoint.com/
posted about 1 year ago by Vernon from Florida
Another good reference book is William J. O'Neil's book "How to Make Money in Stocks"- although it will require a few readings. Good combinations of Fundamental and Technical analysis.
posted about 1 year ago by Dana from Massachusetts
Very informative article. I plan to print a copy and keep it close to my computer as a reference tool.
posted about 1 year ago by Don from Indiana
Please permit me to suggest a title for Technical analysis, a refined, more scientific approach - Market Psychotechnoloy Analysis (MPA). This kind of blends the fact findings -science with that of human behaviors - emotions and feelings - drivers of our economic engines.
Thanks for reading
posted about 1 month ago by Vaidy Bala from
