The Internet is the information about the benefits of technical analysis. (TA) today there are hundreds of courses that teach traders to read the short format. "" All of this pushing the idea that Technical analysis brought a sure profit. But there are techniques to really make a profit trading rules and should be used in trading. Consider the problem of technical analysis
What is technical analysis.
A technical analysis of market price forecasts by analyzing data and charts that are created in the process of trading.
Obvious origin. Can be attributed to historical articles published? Wall Street Journal by Charles star in the late 18 century fans of technical analysis, believes that some formations on the charts and patterns to reflect the psychology of the market or currency pair only. There are several prerequisites that indicate that it is a tool to forecast the trusted:
1 the movement of all market considerations.
It is believed to be the basic principles of technical analysis, market prices reflect all information needed. Including the basic activities and external factors like economic news. So you just need to know the behavior of the currency pairs history in order to predict future behaviour.
2 is in trend.
Technical analysts believe that the price changes in a certain direction, that is, up and down the sides.
3 of history often repeats itself.
Technical analysts believe that prices are likely to. Repeat yourself, because traders are behavioral patterns. As a rule, Recursive behaviour of traders, traders earlier them. Therefore, the Technicians believe the recall and will have developed a forecast prices on the chart.
These assumptions The technicians use price charts to find the common patterns. (For example, reputation, head and shoulders, or top/bottom formats pairs) and look for shapes such as support and resistance lines. Channels, the idea is to try and find these models and take advantage of them. Technical analysts also use indicators. Including the growth and volume, and increase or decrease the price to see the trend of the currency pair decreased.
To be honest, I am constantly using technical analysis. And finding a pattern in the majority of cases, it really helped, I think, but sometimes there are some problems and obstacles. To find out if the technique works in trading. Or not.
The issue of technical analysis
It all depends, do the following: Based on that, everything should work, but the point is that the technical analysis will usually work.
Technical analysis is subjective.
Technical analysis is the rule of man. Define and use in accordance with their beliefs. Analysts predict conflicts on the same information. The presence of certain patterns in the chart price often depends on the perspective of the person whose chart styles. In addition, a variety of indicators is almost unlimited. And how very different.
For this reason, technical analysis, it is difficult to prove. One indicator, it can not be forecast. The experts will probably argue that in the current market conditions. One of the indicators that should be considered in an entirely different way.
For example, if a buyer analyst (cow), He will see the signal to open the purchase order, there may be no. If the analyst is the seller (the bear), then he will open sales orders, as a rule.
Or let's take for example format, there are a lot of them. Traders can see different styles in the chart.
Therefore, it is difficult to say that everybody will see an image of yourself and it is a normal situation, so everyone has an idea of his own.
From the same analysis, one can draw different conclusions. Maybe the This phenomenon is one of the technical analysis is the most serious problem.
Although there is a generally accepted standard, usually two analysts could view the different trends in one chart. What's interesting is that the two analysts will find confirmation of them. And they will have the correct logical reasons. But I don't see that technical analysis will. A science that it is certainly more than art.
Did you ever understand people until you consider the difference? From the perspective of his Foundation © Harper Lee
Technical analysis is often accused of giving a signal too late. By the time the technician find and confirm the tendency of most of the changes will be over. And the proportion of profits, the risk is not so great. The issue of technical analysis are often associated with. lateness
Unfortunately, all the numbers of the work in technical analysis. 100% of patients. With more detailed additional technical analysis studies You will learn about open standards, the figures. The following figures, trends, etc., and learn what to expect. With this or that behaviour of the instrument. But did you know that there is a significant difference between theory and practice. In life you will find surprises in the market.
Example, it is known that if the price level of the neck, weeping, a head-and-shoulders pattern. Then you need to sell, but this is the general rule, but it may still work, because some of the influence of external factors. Such as the trading volume.
Lack of understanding of fundamental
Technical analysts who rely primarily on technical analysis. They believe that the events in the markets that affect the movement of the price has already been taken into consideration. In General, Analysts said it is not possible to use fundamental analysis. Believe it is not necessary to check the flow of information. This is the main mistake of technical analysts.
How to avoid the problem of technical analysis and trade effectively.
He wants to draw your attention once again on the fact that technical analysis is not bad at all. Just want to use it correctly. Here is a short list of rules for you:
- Both technical and fundamental analysis studies. Use only one type of analysis. Entrepreneurs consciously limiting his ability. And does not provide optimal performance. If you take into account the technical analysis only. And do not look on the economic calendar, you will lose your deposit.
For example, during the publicity expected which is capable not only of causing sharp price jump. But also to turn around the current trend.
- Don't believe all the good technical analysts say trading method. If you are a beginner, then certainly. Find a guru to tell and show the pictures to see what type, but if you listen to the song and then unquestioningly, you will not learn how to format. And summary right from them independently. Learn Make mistakes. Find your style, only then you will be successful.
- There is a purpose, and does not, perhaps, venturesome, this is one of the most important rules in the market. It's always worth keeping a cool head and Subjectivity, greed, leads to a significant loss.
Well you see. There are disadvantages in the analysis. However, all the time, I wrote an article about the technical analysis indicators. And look for a pattern I show in this article. I just wanted to say that nothing is perfect and doesn't work. Technical analysis, there are still problems and defects.
So be careful and have a good profit.