How to trade stocks using technical analysis?
There are different methods that traders approach the stock market and technical analysis is by far the best analysis for profit from short term trading.
There are people who use insider trading which is illegal, so that's not the approach you want to go with. Then there are people who speculate, they buy stocks primary base on tips and news. There people won't last long in the stock market.
Then there is fundamental analysis which is a pretty nice approach for long term investing where you buy a stock and hold for many years. Warren Buffett is the best investor who uses this approach and he is the world's second richest person. This proves that fundamental analysis works well, but you need to be really patient and have a good insight about the future. Warren Buffett holds some stocks for more than twenty five years. If this sounds like something you want to do, then fundamental analysis is a pretty nice approach to stock analysis.
Then there is technical analysis which is my favorite way in approaching the stock market. Technical analysis is a stock analysis approach that focuses exclusively on stock charts. Each company that are currently trading on a stock exchange is trading for a different price each and everyday and when you plot these prices into a chart, you can see patterns. Some patterns are easy to recognize, some are harder, but you certainly don't need a math degree to use this approach.
There are many traders who make good profit using technical analysis include traders from Wall Street. Traders develop many technical indicators which directly or indirectly derive from the stock price and gives hint whether or not a stock will go up in the near term.
Some technical indicators are widely use across the trading world. These include Candlestick Patterns, Macd, Sotchastic, ADX, RSI, Moving Averages, Exponential Moving Average, CCI, and many more.
The way for you trade successfully is to pick a couple of these technical indicators and apply it to the stock chart. Then follow some stocks for a couple of weeks and see how these patterns work out. If the patterns work well, then you can trade with real money with the system you have.
There are many trading system that are available from stock trading sites where you can use for free. Try to apply these methods and see how they work. Remember, history repeats itself and that's the basic principle behind technical analysis.
To learn more about technical analysis and how to apply these technical indicators, you can visit my stock trading strategies blog or stock screener to scan for these patterns.
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