How Can Technical Analysis Help Your Trading?
Every trader or investor has a simple question. Should I buy today? Or sell? What will prices be tomorrow, next week, or next year? Trading would be very easy if we knew the answers to these seemingly simple questions.
You may wish Technical Analysis will be able to give a definite answer on these questions. But I'm afraid, you will be disappointed. Technical Analysis can not give the 100% correct answer. Technical analysis can indeed provide a signal to buy or sell, but the results can not be ensured 100% profitable. According to empirical experience, experts said, the accuracy of Technical Analysis is only 60% -70%. A little bit better than toss the coin.
Then what can Technical Analysis do to help your trade? As previously explained, technical analysis can serve as a guide on your trading. Trading without a guide, just like gambling. If you're hoping that technical analysis will improve your way of trading or investing--it will! Technical Analysis can give your thorough understanding about how market behave. It can tell you where the market is headed, bullish or bearish. Therefore, you will not act against the market. Thus reduce the risk of losing your money.
The fact, only a few of people can consistently and accurately determine future prices. However, even if you are unable to accurately forecast prices, technical analysis can be used to consistently reduce your risks and improve your profits.If an investor purchases a security, he doesn't know that its price will rise. But if he buys a stock when it is in a rising trend, after a minor sell off, he will have improved his odds of making a profit. Even if your analysis is as simple as determining the trends of the security, you will have gained an edge that you would not have without technical analysis.
Buy ... sell ... buy ... sell ...
Technical Analysis can help you avoid this kind of situation
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