» Stock Investing Basics » Technical Analysis Basics

Technical Analysis Basics

Some investors are more willing to incorporate numbers analysis when selecting stocks. Additionally, if you are comfortable with your technology skill, then you should consider the application of the technical analysis tool for stock picking. This technique is concerned with such relationships as between the price of the stock and the number of shares traded during a trading day (volume). Technical analysts tend to use different mathematical techniques in order to predict future trends in the prices of a target stock.

Charts are drawn that picture the direction of the price of the stock and its future changes. The terminology applied in technical analysis is somehow strange, but once you get used to it, it will make more sense to you. Making sound interpretations of the resulting form the technical analysis charts and graphs will result in more reliable decisions regarding the future rises and falls of the stock's price.

Charts also include additional information which is accompanied by a price history. You will often find a moving average as part of charts.

Technical analysis includes the daily calculations of the stocks price including a time period that may range from 90 to 200 days. The moving average is usually used in order to determine the past trends of the price of the stock.

If you decide to use this type of analysis you should provide yourself with a charting software and price data. Additionally, you should be able to allocate the needed time.

In the center of the technical analysis stands a chart depicting the price of the stock. Some of the software programs you can select for your technical analysis include MetaStock, Windows on Wall Street and many others. Additionally, the Internet provides sources for technical analysis execution which are offered in return to a subscription. Additionally, from there you can extract information on the daily fluctuations of stock prices.

Since some of the technical analysis software is not for free and comes to high prices, you may consider some of the less sophisticated software that is available free of charge over the Internet.

Regular examinations of your portfolio should be made. This means that you should be able to allocate enough time to study charts and adjust the indicators you have included as part of your analysis. Close examinations of the stock's price is required in order to determine when the time has come to sell the stock.

Since the technical analysis is based on data from past performance, this method has many opponents. They argue that past performance is not an indicator of future repeated performance.

Rate this article : Low
  • Currently 2.8/5 Stars
  • 1
  • 2
  • 3
  • 4
  • 5