|Bio:||Do You Want To Know More About Technical Analysis In Stock Trading?
In simple terms, technical analysis is a technical analysis aimed at observing patterns such as market data, stock prices, and stock transaction volume. This means, not looking at matters related to economic conditions, the company's financial health, and future business prospects. Is this analysis speculative? Of course not. Speculation is guesswork, but technical analysis certainly has data. Meanwhile, if you also need to learn more about stock trading, we recommend you check out some premarket stock tips.
Is it different from fundamental analysis?
There are several differences between fundamental and technical analysis that investors or those who are new to investing in stocks should know.
Technical analysis is more often used by stock traders who view stocks as a commodity.
They will buy the stock when the price corrects and sell it when it rebounds. If the stock price drops again, they will continue to monitor it up to a certain point, they will buy the stock back and sell it.
In essence, take profits in the short term only or hit and run.
If you wish to learn about this type of analysis, you must know first some of the assumptions underlying this analysis.
Basic assumptions of stock technical analysis
Simply put, the basic assumption of this analysis is that anything that affects market movements is reflected in the history of previous market movements. Some of the assumptions underlying this analysis are.
Market data means all information obtained from all transactions on the stock exchange. Some of the components included in this market data are of course:
The trend of stock price movements of an issuer within a certain period.
This data will tell you the number of shares at a certain price and on a certain day.
This one assumption explains that stock price movements do not just fluctuate. But there is a pattern or trend that will last until it finally reverses.
The trend direction itself is divided into three. There is an uptrend, a downtrend, and there are also sideways (not up and not down because it's still looking for new price movements).
From this movement, several decisions will emerge. Is it buy (buy), sell (sell), or wait and see (wait).
In a book called The Dow Theory described by Charles H. Dow, trends are grouped into three, namely:
- Primary Trend: Price movement over a long period
- Secondary Trend: The price movement "which occurs during the primary trend price movement."
- Minor trend: daily price fluctuation
So, the terms bull and bear market itself can be used to describe the primary trend.
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