How Technical Analysis is Useful for Stock Trading?

In this article we are going to have a cursory look at the technical analysis. The technical analysis is utilized by expert advisors like TradeNexa Research to generate accurate Stock Option Tips.

Technical Analysis:-
Technical analysis is just the forecasting of the future financial price movements that are mainly based on the earlier price movement. Technical analysis does not give the absolute prediction for the future market. Technical analysis just gives an indication to the investors so as to be ready what is likely to happen or not. Technical analysis is applicable to indices, stocks, futures and Commodity.

The technical analysis makes three assumptions, these are:-

A. High Volumes:-
High volume stock allows the investors to trade easily as well as quickly. Time traded stock is very difficult to trade. Because there is no any guarantee that sellers, as well as buyers, are present every time. Sellers and buyers have to change their correspondent price. 

B. No artificial price change:-
Dividends split, and distributions are the very common type of culprit for artificial price change. These types of price change get influenced by the outside sources.

C. No extra news:-
Technical analysis need not predict the news related to business events, extreme events or political events such as terrorist attacks.

Various assumptions of Technical Analysis:-
The assumption is that market price of the security at any given point of time, just reflects all the information and thus indicates the true and fair value of the security. 
Another assumption of underlying technical analysis is that the price change is not random and it leads to the faith in technical analyst that is for the long term, short term, the market trend is to be identified. This is to enable traders to take profit from investing.

Indicators:-
Indicators just represent the statistical approach of the technical analysis. Just looking at the trend, volatility, money flow and momentum they are going to provide secondary measure and also help traders so that they can measure the actual price movement. Indicators are of two types. One is lagging indicator and another one is leading indicator. Lagging indicators follow price movement. It thus acts as a confirmation tool. Lagging indicators are most useful for the trending period. Leading indicators are able to precede the price movement and then predict the future trend.

Oscillator:-
Oscillators are a common type of technical indicators. Oscillators bound within a range. For example, an oscillator is having a low of 0 and high of 100, that means 0 corresponds to an oversold condition and 100 corresponds to over brought condition.
Thus, we have seen the importance of technical analysis in Stock Trading. Technical analysis is extensively used to anticipate the price movements and to generate accurate Stock Option Tips.

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