| Technical analysis is a non-traditional way of picking | | | | these trends and patterns rather than looking at a |
| stocks to buy and sell. It is based off of human | | | | company's financials can be a smart way to approach |
| emotions and patterns in those emotions. | | | | the market. This simplified approach to the market |
| A technical trader realizes that stocks do not move | | | | disregards all fundamental factors such as dividends, |
| up and down because a company is making or losing | | | | cash flow statements, P/E rations, and so on. |
| money. A stock goes up and down based off of | | | | There are a variety of instruments a technical trader |
| supply and demand. If there are more buyers than | | | | can use to determine if a stock is a good buy or a |
| sellers a stock will normally go up until it reaches a | | | | good sell. Oscillators, chart patterns, stock trend, and |
| point where sellers start to come in. This can be | | | | candlestick patterns are all used to determine if a |
| flipped around. If a stock has more sellers than | | | | company makes a good trade or not. |
| buyers it can push the stock down until the stock | | | | So does it work? Technical analysis has proven to be |
| gets to a low enough point and buyers start to | | | | a great way to approach the stock market. Combing |
| come back in. | | | | Technical analysis with risk management may be the |
| Technical analysis tries to play off of this. They | | | | best way to approach the stock market for a short |
| notice human emotions create patterns and trends | | | | term trader. |
| that occur over and over again. So playing off of | | | | |