Starting with technical analysis

Starting with technical analysis

As we stated last time, there are two main types of analysis for your assets. There is fundamental analysis and the second is technical. Fundamental analysis has to do with the background information of an asset, of a stock or physical asset. Technical analysis means using charts, and following what the trends of the chart tells you. So, here is a short guide on how to start technical trading.

Developing a strategy

The first thing is figuring out how you want to trade. This partly depends on how much liquidity you have available. If you are low on funds it is best to stick with small, low risk trades over short trends. If you find you can do great in short spurts, this may also be the strategy for you. You can of course also try more long term strategies, looking at trends that have effects over several days.

Become familiar with charts and patterns

Figure out the right charts for you, and learn how it works accordingly. The most popular of these is the candlestick chart. It tells it viewer the range of prices at any current moment, and where the price has gone up and down (by colour coordination). Furthermore, you will need to know the appropriate patterns with which to analyse these charts. This includes the wedge, cup and handle, head and shoulders, double top, double bottom, rounding bottom patterns. This is only a few of the most popular ones we will mention.

Trading software

One of the most important thing you will have to do is find reliable software. What you want is a program with many tools and does not suffer from delays. A delay could cost you dearly, since some market prices change so quickly. MetaTrader 4 and 5 are highly popular trading programs, and are quite reliable. It should be noted that the two have somewhat different uses. Most reliable brokers even offer their own trading software. Since you are paying for their services, most of these are quite dependable, although this obviously depends on the broker.

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