What are the basics of "technical analysis" in trading?
Asked 4 years ago
Hi, I've just opened my trading account with a broker, and I'm ready to trade. Do professional traders use technical analysis? If so, can you tell me what the basics of technical analysis are and whether it is enough for trading, or if I would need to learn to use other trading tools as well?
Andrew Moran
Monday, January 17, 2022
First, it is important to understand just what technical analysis is.
It is essentially a strategy of using key technical indicators, analytical trading tools, and charts. They are then utilized to determine the pattern of price trends and determine the price action moving forward.
All types of investors can use these mechanisms to their advantage, be it technical traders or armchair investors.
For example, one of the more popular technical indicators is the relative strength index (RSI). It measures the momentum and magnitude of recent price changes to learn if a security is overbought or oversold. Or, put simply, is the stock poised for a rally or a downturn?
So, yes, technical analysis is enough for trading and it should be a key factor if you are actively investing considerable sums of capital. This should be one of many tools at your disposal to profit off of the equities arena.
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