| Technical analysis is a hot topic for almost anyone | | | | was famous for using nothing but technical analysis |
| who is hoping to make money from investing. Many | | | | to make his money. |
| people have tried to learn about it as a way to cash | | | | However, these people invested HUGE amounts of |
| in from the stock market. The question is, is it a | | | | time to become the trader they are. Technical |
| useful strategy to use if you want to make money | | | | analysis is - as the name suggests - very technical! |
| from stocks? | | | | This means you must spend a lot of time studying |
| Let's have a very quick look at what technical | | | | the art in order to be able to use it properly. |
| analysis involves. People who use this technique are | | | | Most people just don't have the time to devote to |
| often referred to as "chartists", based of course on | | | | learning it properly. I firmly believe that unless trading |
| the fact that they spend much of their day analyzing | | | | is your career, there are simpler ways for you to |
| stock charts in an effort to find profitable trades. | | | | make money from investing. The time investment in |
| Chartists will examine charts and price action in order | | | | learning technical analysis of the stock market is huge. |
| to look for patterns that they believe will lead to | | | | There is lots of money to be made from investing! |
| potentially profitable trades. There are a number of | | | | I'm a firm believer in the KISS (keep it simple stupid) |
| patterns they look for (far too many to list) and their | | | | method and I apply this to my trading as well. In my |
| goal is to be able to spot their formation and then | | | | opinion, using technical analysis is anything but simple. |
| take advantage of it. | | | | The average investor should focus on finding simple, |
| They will also use "technical indicators" which are | | | | proven strategies that increase his bankroll over time. |
| typically calculations that use price and volume history | | | | Too many times I've seen people take on techniques |
| to point out buying or selling signals along with times | | | | that they don't have time to master and then end up |
| when the market may be overbought or oversold. | | | | losing large sums of money. Don't let this be you! |
| Do I know people who make money from technical | | | | At the end of the day, technical analysis of the stock |
| analysis? | | | | market can be profitable, however one needs to |
| I certainly do! In my days a foreign exchange trader | | | | understand that it takes an incredible amount of time |
| I met several people who had made significant | | | | to learn and use properly. In my opinion there are |
| amounts of money from these techniques. I | | | | much better areas for the average investor to focus |
| remember one trader at the firm I worked at that | | | | their time on. |