About Technical Analysis – Comprehensive Training
Technical Analysis is an examination technique to recognize trading opportunities in the market on the basis of activities of market’s participants. The movements of these participants can be envisioned by the preparation of a stock chart. With the passage of time, patterns are shaped within these charts and each pattern expresses a different meaning. The duty of a technical analyst is to recognize these patterns and construct an opinion. Just like any other technique, technical analysis also is based on a few assumptions. As an expert of technical analysis, one needs to trade in the market after considering all assumptions in standpoint.
Well, as we already know there is nothing such as one best research methodology. In fact, all research methods have their own merits and drawbacks. It would be pointless to invest time in comparing TA and FA so as to figure out which of these is better method. Both techniques are equally efficient and thus not comparable. As a matter of fact, any wise trader would devote time on getting educated about both these techniques so as to identify superior trading and investing prospects.
Technical analysis is quite often approached by market participants as a fast and easy tactic to make a huge boon in the market. In actuality, technical analysis is quite opposite to quick and easy. Sure, if approached correctly, a boon gain is possible but to get to that phase, one has to devote the required effort to acquire and learn this technique. Moreover, if one tries to take TA as a fast and easy approach to making huge money in markets then trading upheaval becomes inevitable. Whenever a trading catastrophe takes place, most certainly the blame goes to technical analysis and not on the trader’s lack of knowledge and misuse of information provided. Thus before one starts to delve deep into technical analysis, it is vital that he or she knows what can and cannot be achieved by technical analysis.
Here are a few significant points to remember in regard to Technical Analysis –
- Trades – TA is most suited to find short-term trades. TA should never be used to recognize long-term investment prospects. This is because long-term investment prospects can be best recognized through fundamental analysis. Furthermore, if one are a fundamental analyst, he/she should utilize TA to regulate the entry and departure points.
- Return per trade – The trades based on TA are usually of short term nature. As said earlier, one should not expect very significant returns within a matter of a few days. The trick with getting successful through TA is to recognize recurrent short-term trading prospects which can offer small and regular profits.
- Holding Period – Trades that are done on the basis of technical analysis are most likely to last anywhere between a few minutes to few weeks, but not beyond that. More information on this aspect can be found on the subject on timeframes.
- Risk – Traders most probably start a trade for a specific reason, though in case of a hostile movement in the stock, the trade begins to make a loss. In such situations, traders usually stick to their loss incurring trades with an expectation of recovering the loss. Recall that TA based trades are most often short-term and in case the trade does not goes as expected, remember to amend the losses and progress to find another occasion.
Technical Analysis- Comprehensive Training Description
What is Technical Analysis?
Technical Analysis is the projection of future financial price shifts that is grounded on the inspection of past price shifts. Similar to weather forecasting, technical analysis also cannot predict the future in an absolute way. Rather, technical analysis can aid investors to anticipate the relative future of prices over the course of time. Technical analysis utilizes an extensive range of charts that depict prices over time.
Technical analysis is pertinent to stocks, commodities, futures, indices or a tradable instrument where the price is subjective by the forces of demand and supply. Price implies the combination of open, high, close or low for a said security over a particular time frame. The time frame may be based on intraday (1-minute, 5-minutes, 10-minutes, 15-minutes, 30-minutes or hourly), daily, weekly or monthly price data and may last for a few hours or many years even. Additionally, certain technical analysts take in volume or open interest figures with the study of price movement.
The Basis of Technical Analysis
The Dow Theory actually laid the fundamentals for what was later to become contemporary technical analysis at the turn of the last century. Dow Theory was never offered as one comprehensive amalgamation, instead patched together from the writings of Charles Dow over numerous years. Pertaining to the Dow Theory, Dow had put forth many theorems of which three stand out:
- Price Discounts Everything
- “What” Is More Important than “Why”
- Price Movements Are Not Totally Random
Here are these assumptions in Technical Analysis :-
Price Discounts Everything
The theorem has its basis on the strong and semi-strong systems of market efficiency. According to the Technical analysts, the current price entirely reflects all information. Since all information is reflected in the price it symbolizes the fair value and must form the basis for analysis. Incidentally, the market price reveals the sum knowledge of all contributors including traders, investors, buy-side analysts, portfolio managers, sell-side analysts, market strategist, technical analysts, fundamental analysts and many such. It would be silly to disagree with the price derived by such an imposing array of experts with flawless credentials. Technical analysis makes use of the information seized by the price to interpret what the market is depicting with the resolve of creating a view on the future.
“What” is More Important than “Why”
Tony Plummer in his book – The Psychology of Technical Analysis, has paraphrased the great author Oscar Wilde by affirming, “A technical analyst knows the price of everything, but the value of nothing”. According to this notion, Technicians or technical analysts as they are called should be only concerned with two things:
- What is the current price?
- What is the history of the price movement?
The price is the by-product of the encounter between the forces of demand and supply for the company’s stock. The purpose of analysis is to forecast the course of the future price. By concentrating on price and only price, technical analysis symbolizes a direct approach.
Price Movements are not Totally Random
Most technicians approve that prices drift. However, most technicians also admit that there are days when prices do not drift. If prices were random always, it would have been extremely hard to make money via technical analysis. As an author Jack Schwager has stated that:
A prominent way of seeing it is that markets may observe extended periods of random fluctuation, scattered with shorter periods of nonrandom performance. The objective of the chartist is to recognize such periods (major trends).
A technician relies on the fact that it is likely to identify a trend, capitalize or trade based on that trend and earn money as the trend develops. Since technical analysis is applicable to many different time frames, the possibility to witness both short-term and long-term trends is high. The IBM chart exemplifies Schwager’s view on the characteristics of the trend. The general trend is upwards, but it is also scattered with trading arrays. Between the trading arrays are smaller trends within the greater uptrend. The uptrend is transformed when the stock disrupts above the trading array. Similarly, a downtrend begins whenever the stock halts below the low of the preceding trading area.
Basic Requirements/ Pre-requisites to Technical Analysis-Comprehensive Training
Technical Analysis – Comprehensive Training course offered by our organization is a completely online academic course comprising of study materials, videos and tutorials, demos, online chats, and FAQ’s all available on our homepage for student reference. Here are some basic pre-requisites for a student interested in our Technical Analysis – Comprehensive Training Course:-
- A PC/Laptop with a high speed Internet Connection and a modern web browser such as Chrome as the entire course is available through online only.
- Basic level knowledge/understanding of the financial markets and commodities.
- Understanding of/well-versed in English language as all course materials are in the language only.
- Basic/Advanced level training/diploma in Security Analysis (preferable).
- Completion of a basic educational qualification/graduate degree such as BA/B.Com/BBA.
- Motivation to acquire invaluable knowledge on TA and FA and their application in stock markets.
The course is ideal for students/professionals/employees/CA’s working in medium-high level organizations and want to master the topics on Technical Analysis – Comprehensive Training for career growth and realizing organizational demands.
Target Audience for the Course
Technical Analysis – Comprehensive Training Course is an online course designed and developed by our highly trained and experienced staff especially for those students and professionals who are looking to make a successful career into security analysis, portfolio management and other financial streams. All relevant information, analysis and data provided in our online course is verified and updated as on each day and is significantly useful for those aspiring finance manager’s and other professionals who are into the finance domain. This course is also very helpful for these people:
- Management Students – Those pursuing MBA/PGDM/PhD in Finance or Financial management.
- Entrepreneurs – People into their own business or aspiring to begin their own venture soon.
- Students – Those aspirant of Management and Technical Analysis courses from reputed top-end institutions of the country.
- Professionals – People working as Portfolio managers, Technicians or such similar rank in any low or high level organization where financial knowledge is required and applicable in day-day business.
- What are the three basic assumptions that need to be kept in mind while doing technical Analysis?
The field of technical analysis is based on three assumptions:
1. The market discounts everything.
2. Price moves in trends.
3. History tends to repeat itself.
- How is Technical Analysis different from Fundamental Analysis?
Ans. The two terms used here refer to the two main stock-picking approaches used for researching and projecting the future growth drifts of stocks. Like any security strategy or viewpoint, both share some advocates and adversaries. Given below are the defining philosophies of each of these approaches of stock analysis:
- Fundamental analysis is a technique of evaluating securities by trying to measure the core value of a stock. Fundamental analysis takes into account almost everything from the overall economy and business conditions to the financial state and management of firms.
- Technical analysis is the assessment of securities by studying the statistical data generated by market activity, like past volume and prices. Technical analysts never try to measure a security’s core value but rather use stock charts to recognize patterns and trends which may propose what a stock is likely to do in the future.
- Where can the concepts learned in this course be applied?
The course on Technical Analysis by eduCBA is a one of a kind. You can get to know better how investments in the stock markets should be made and how does price and volume affect the patterns of trade. You will be able to successfully trade in stock markets as an individual or as a dealer. You would have learnt the tips and tricks of making the most profit out of your investments in the financial markets.
By successfully completing this specially designed online course a student would not only be more familiar about Fundamental Analysis and Securities but also become a master in the subject of Technical Analysis. Those who wish to acquire gainful employment after completing the course would get ample opportunities not only in India but abroad also.
After completing my graduation in Finance I wanted to pursue a dedicated course on Technical Analysis as it was of much interest to me and also a very rewarding subject to learn. After researching on the Internet, I found the eduCBA course to be reasonably priced but much comprehensive and practically constructed. I could quickly grasp all study modules that were accompanied by test exercises and relevant case studies. It was stimulating and very informative. Thanks to it I am a master Technician now.
Career benefits of this course
As we have been mentioning previously in the article that our Technical Analysis – Comprehensive Training Course is suited to those executives and professionals who are in the domain of Accounting or Financial Management or looking to launch a successful career in these fields. Our course on Technical Analysis – Comprehensive Training provides to an aspiring Security Analyst or Portfolio Manager, all the information, data, analysis, video lectures, query solutions and tools and techniques that are needed to become one.
The students would get to know better as to how to study the stock markets and gather relevant data in order to frame opinions about the price. We can guarantee that after successful completion of this online course, the student would not only have gained precious knowledge on Technical Analysis and Fundamental Analysis as a topic but would be able to serve his organization in a much better way or find a lucrative job in one of the top companies of the country.