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Study of hoe to do technical analysis

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http://www.investopedia.com/university/technical/?partner=COTW01
Technical Analysis: Introduction
By Cory Janssen, Chad Langager and Casey Murphy
The methods used to analyze securities and make investment decisions fall into two very broad
categories: fundamental analysis and technical analysis. Fundamental analysis involves analyzing the
characteristics of a company in order to estimate its value. Technical analysis takes a completely
different approach; it doesn't care one bit about the "value" of a company or a commodity. Technicians
(sometimes called chartists) are only interested in the price movements in the market.
Despite all the fancy and exotic tools it employs, technical analysis really just studies supply and
demand in a market in an attempt to determine what direction, or trend, will continue in the
future. In other words, technical analysis attempts to understand the emotions in the market by
studying the market itself, as opposed to its components. If you understand the benefits and
limitations of technical analysis, it can give you a new set of tools or skills that will enable you to
be a better trader or investor.
In this tutorial, we'll introduce you to the subject of technical analysis. It's a broad topic, so we'll
just cover the basics, providing you with the foundation you'll need to understand more advanced
concepts down the road.
Next: Technical Analysis: The Basic Assumptions
Table of Contents
1) Technical Analysis: Introduction
2) Technical Analysis: The Basic Assumptions
3) Technical Analysis: Fundamental Vs. Technical Analysis
4) Technical Analysis: The Use Of Trend
5) Technical Analysis: Support And Resistance
6) Technical Analysis: The Importance Of Volume
7) Technical Analysis: What Is A Chart?
8) Technical Analysis: Chart Types
9) Technical Analysis: Chart Patterns
10) Technical Analysis: Moving Averages
11) Technical Analysis: Indicators And Oscillators
12) Technical Analysis: Conclusion

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What Is Technical Analysis?
Technical analysis is a method of evaluating securities by analyzing the statistics generated by market
activity, such as past prices and volume. Technical analysts do not attempt to measure a security's
intrinsic value, but instead use charts and other tools to identify patterns that can suggest future
activity.
Just as there are many investment styles on the fundamental side, there are also many different types
of technical traders. Some rely on chart patterns, others use technical indicators and oscillators, and
most use some combination of the two. In any case, technical analysts' exclusive use of historical price
and volume data is what separates them from their fundamental counterparts. Unlike fundamental
analysts, technical analysts don't care whether a stock is undervalued - the only thing that matters is a
security's past trading data and what information this data can provide about where the security might
move in the future.
The field of technical analysis is based on three assumptions:
1. The market discounts everything.
2. Price moves in trends.
3. History tends to repeat itself.
1. The Market Discounts Everything
A major criticism of technical analysis is that it only considers price movement, ignoring the fundamental
factors of the company. However, technical analysis assumes that, at any given time, a stock's price
reflects everything that has or could affect the company - including fundamental factors. Technical
analysts believe that the company's fundamentals, along with broader economic factors and market
psychology, are all priced into the stock, removing the need to actually consider these factors
separately. This only leaves the analysis of price movement, which technical theory views as a product of
the supply and demand for a particular stock in the market.
2. Price Moves in Trends
In technical analysis, price movements are believed to follow trends. This means that after a trend has
been established, the future price movement is more likely to be in the same direction as the trend than
to be against it. Most technical trading strategies are based on this assumption.
3. History Tends To Repeat Itself
Another important idea in technical analysis is that history tends to repeat itself, mainly in terms of price
movement. The repetitive nature of price movements is attributed to market psychology; in other
words, market participants tend to provide a consistent reaction to similar market stimuli over time.
Technical analysis uses chart patterns to analyze market movements and understand trends. Although
many of these charts have been used for more than 100 years, they are still believed to be relevant
because they illustrate patterns in price movements that often repeat themselves.

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http://www.investopedia.com/university/technical/?partner=COTW01 Technical Analysis: Introduction By Cory Janssen, Chad Langager and Casey Murphy The methods used to analyze securities and make investment decisions fall into two very broad categories: fundamental analysis and technical analysis. Fundamental analysis involves analyzing the characteristics of a company in order to estimate its value. Technical analysis takes a completely different approach; it doesn't care one bit about the "value" of a company or a commodity. Technicians (sometimes called chartists) are only interested in the price movements in the market. Despite all the fancy and exotic tools it employs, technical analysis really just studies supply and demand in a market in an attempt to determine what direction, or trend, will continue in the future. In other words, technical analysis attempts to understand the emotions in the market by studying the market itself, as opposed to its components. If you understand the benefits and limitations of technical analysis, it can give you a new set of tools or skills that will enable you to be a better trader or investor. In this tutorial, we'll introduce you to the subject of technical analysis. It's a broad topic, so we'll just cover the basics, providing you with the foundation you'll need to understand more advanced concepts down the road. Next: Technical Analysis: The Basic Assumptions Table of Contents 1) Technical Analysis: Introduction 2) Techni ...
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