What is technical analysis? | Technical Analysis For Beginners
Hello Hiveans!
Do you know, which is the best investment according to Warren Buffet? Warren Buffet said that "the best investment you can make, is an investment in yourself.... The more you learn, the more you'll earn". Think, the 6th richest man of the word saying that then how much it worths.
Guys, if hard work can make people rich then the richest man of the words is labour but it's not truth. A labour can just fulfil his food expenses hardly but who hire the labours he live a easy life in air conditioner, work in AC, travel in AC car, and sleep at night under AC in his house. So it proves that it is a myth that the more you work hard, the more you earn.
People spend lacs to take visa of foreign countries to do labour work but if someone ask them that they can earn more money by spending less money then they thought its is scam. Because our mentality has build that money can only earned by just doing hard work.
In this new Era, if someone is poor then he is poor at his own desire because it's quite easy to be Rich in this internet world. People make thier selves rich in last 20 years due to internet and technology. Today, I'm talking about the skill that us technical analysis skill. You can use this skill in many ways like, you can use this skill to earn in Pakistan stock exchange or you can use this skill to earn in international market by trading in dollars. In the history of stock market, the thing that are mostly liked by investors is technical analysis, this is a method in which investors can make money easily by using this skill.
Guys, when we trade in stock market, we want to make money buy short term price movement of particular stock but share's price varies very quickly, in this situation how we will we get idea that how and where we trade in order to get profit. In this situation, technical analysis was developed, it is used for predictions of particular share by watching their historical growth and many other factors.
Its many based on three assumptions, first assumption is market discounts everything that means, a company's share price carries already companies information effect all time that's why company's Share price will not change due to related information of that company. In this assumption, it is known that all the fundamental factors like company's business quality, profit potential, earning prospects always include in company's share price that's we don't need to consider these factors and we pay attention on the share's price.
And the second assumption...
is stock prices move in trends, in simple words, every trade price goes up and down in a pattern. In this assumption, it is known that the share price will be same in the future as the current price. Trends are short term,medium and long term. These trend are called uptrend, down trend and sideways trend. In upturned, share's price increases in a pattern and in down trend, share's price decreases in a pattern and the last one sideways trend, share's price moves in a constant price.
The third assumption...
is History tends to repeat itself. In technical analysis, it is known that history repeat in stock market, its means that the share's price will change in future same as it was changed in the past when it was dropped. In this assumption, it is known that prices change by investor's emotions and behaviours and as behaved by investors in the past same it will behave in future. So these are three assumptions on that technical analysis was developed.
So if you want to use technical analysis then you have to accept and learn these three assumptions. How we can get that how will share price move? It can be predicted by a lot historical data of that particular stock, we see different historical data points and then predict the stock price. Data points are historical trends, candle charts, and different indicators. These points tell us that which type of change that was happened due to past data changes. If we analyse the same past data changes then we will predict that share' price will move in same pattern as it was moved in past in same situation.
Wrapping Up
Always remember, in stock market, just one strategy is not same for all time. It's not compulsory that we will get our actual price by technical analysis that's why it's important that we must consider the limitation with technical analysis updates. Technical analysis will just tell you predicted price, it doesn't mean that the price will same as you predicted. The thing which decide our success or failure is that how we use technical analysis as a guide or consider it a shortcut to earn money in stock market.
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