- December 13, 2021
- Posted by: Robert Brown
- Category: Investing
The stock market is a very volatile place. It’s full of uncertainties. The market may boom upwards or even crash, causing heavy losses. These are a part and parcel of everyday market’s life. But as an investor, you must know what to expect from the market and for that you need to be in regular contact with your investment advisory.
The investment advisory comes up with regular analysis for the benefit of its investors so that they can plan their buying/selling of stocks accordingly.
There are two types of analysis, Technical and Fundamental analysis.
The Fundamental analysis examines earnings, dividends, of an investor. Based on this research, new products are created for betterment of investor’s investing ways.
Technical analysis examines what the investors fear or think about the developments, whether or not the investors have the capacity to backup their options. These two concepts are called Psych and supply/demand.
The stock market technicians employ various techniques, one of which is the use of various charts and graphs.
Using these charts, technical analysts seek to identify price patterns and various market trends in the financial markets and try to exploit those patterns. These technicians use also use various methods and tools to study the price charts. Technicians who use chart for archetypal price chart patterns such as double top/bottom reversal patterns, study technical indicators, moving averages and looking for various forms such as lines of support, resistance, channels and many obscure formations such as flags, balance days and cup and handle patterns,
Technical analysts also widely make use of market indicators, some of which are mathematical transformations of price, often including the up and down volume, advance/decline data and other various inputs.
These indications are used to help and assess whether an asset is trending and if it is, the probability of its direction and continuation. The experts also look for a relationship between the price/volume indices and market indicators.
Various examples include the relative strength index, MACD.
There are many techniques used in technical analysis. Adherents of these different techniques may avoid or ignore the other approaches, yet many traders combine various elements from more than one technique. Some use subjective judgment to decide on a particular pattern, a particular instrument reflecting at a given time and what the interpretation of that pattern should be. Others strictly use mechanical or systematic approach to pattern the identification and interpretation.
However, the volatility of the markets make the stock prices variable.