Sunday, 7 September 2014

Technical Analysis

Following from last week's post on Fundamental analysis (that you can see here: http://illuminatingfinance.blogspot.com.au/2014/05/fundamental-trading.html), I thought this week I would explain to the other type of analysis referred to as technical analysis.

Technical analysis uses an examination of historical data to form predictions for future price action. These are most commonly an analysis of price and volume. Traders who utilize technical analysis to make trading decisions often run very systematic trading strategies. This reduces emotional involvement to almost zero, instead using quantitative data to indicate when to enter or exit the market. The graph below shows a trend which a technical trader may have picked up using his system.