Technical Analysis

What is technical analysis

Technical analysis is an analysis methodology for forecasting the direction of prices through the study of past market data, primarily price and volume. This means the method tries to understand what the market thinks based on action taken by the market, and predict the price movement

Does technical analysis works

Yes it does as proven by many. This is a lagging method as this method is more like watching someone’s action then perform a similar action, unlike fundamental analysis where the trader perform the action as a leader. Benefit of this method is as follow

1. Do not need to do a lot of analysis, much faster response
2. Going with the flow as you are trying to tell what everybody else thinks, meaning the result has been verified

Drawback

1. Works best with small capital
2. The trend could be wrong or a fake
3. Smaller profit margin

Who uses technical analysis

Mainly smaller traders but some institutional traders do use this as confirmation to their analysis.