When using technical analysis we look at the charts to see what has happened in the past, what's happening right now, and what might happen in the future.
There are just to many things going on in the markets. It's hard to keep up with it all the information thundering around. Speculations, news, numbers, reports, expectations and all the tittle-tattle taking place. If we shut all this noise down, and concentrate on the charts, we still get all the information accumulated in one place.
The charts reflects the outcome of all participants,- traders, investors, portfolio managers, market strategist, technical analysts, fundamental analysts and many others. This outcome is what technical analysis is all about. We follow the footprints from all participants.
We look for candlestick formations, price zones, trend lines, support and resistance areas, and other market movements. Using indicators is quite popular to.
To make things simple, imagine driving a car coming up to a crossroad with traffic lights, if it's green you go, if it's red you stop, and if it's yellow you pay attention. The same thing goes with charts. The crossroad would be a price zone or a trendline, where bullish or bearish candles will appear. If it's bullish (green) then the byers are here. If it's bearish (red) the sellers has entered the building. And if it's a doji candle (yellow), hold your horses.
When using technical analysis it's important to have a strategi, and this strategi should be your own.
You should try and keep it as simple as possible. You could for example take a buy trade printed by a bullish candle on a rising trendline, combined with a moving average indicator. It's recommended that you spend a lot of time working on this to get confident with your trading. We can actually not stress this enough. When it comes to trading, you, yourself is your worst enemy.
Trading psychology can be a real pain in the ass. But that's a whole other story.
The most important thing is never to stop learning.
There are a lot of tools you can use to get your trading on the right track.
You can backtest in simulators and you can demo trade. There are also many good tutors, coaches and mentors out there. But for the love of god, please choose them wisely. There are many scammers as well.
We will do our best to build our library of top notch material for all you traders out there.
Now check out some technical setups in our members forum.
Good luck. Happy trading, and may the markets be with you.