The aim of technical analysis is to try and forecast the direction that the market might take in the near future based on previous data in the financial market. Traders use charting software which over recent years has become very sophisticated. However no matter how hard someone might try to convince you, there is no such thing as a perfect trading system/robot that is right all the time. As a new trader you can do yourself a huge favour, save yourself a lot of time and possibly money by staying well clear of anything that would try to tell you otherwise.
There is no substitute for screen time and hard study hours. It is a must that while you do this and when you are ready to start trading you use a demo account. These are accounts companies provide with an opening amount of virtual money if you like where you can test your style of trading without risking any of your own money. A great way to see if what you think is a great plan really is up to a real time market test. We would always recommend it happens like this for a newbie. Watch the charts, study the price action (movement) develop and test your own style/trading plan. Then practice on your demo account until you have perfected your own style and have started to be profitable before you even think about risking your own money in a live account.
Sounds sensible enough doesn't it, well you will be surprised by the amount of people who just dive into trading before they are ready or even given a thought to technical analysis or understand what they are looking at. Like we have said before this is not a get rich quick scheme, it is a serious long term commitment which can be very rewarding when you get it right. That's why we are all here isn't it? To get it right.
Ok this is where we are going to dive into some charts together and explain what it is we are looking at. Explain all the different bits of information that they display and how to use the charts to your advantage.
We will look at the different ways of displaying
Most charting packages will let customize your look and feel to suit your taste.
We think the best way to learn about technical analysis in the beginning is to keep it as simple as possible and so the charts we will be looking at first will not look like the one on the left here.
We will be keeping them as clean and as clear as possible. We will build with you a solid foundation set in the basic principles of technical analysis that will help you build your trading strategy.
What is support and resistance and how can I plot it on a chart? Lets start the basic chart analysis with the idea of
support and resistance.
Trend and trend following. Read this article to see what a
is and how to plot one on your charts.
At the start of your trading day one of the first things you need to find out is if the market is
"Ranging" or "Trending"
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