Posts Tagged ‘technical analysis’

Technical Analysis

By: ispeculatornew | Date posted: 12.12.2007 (3:34 pm)

I use a little technical analysis (TA) in my investment decisions but for the most part I think technical analysis is a bunch of nonsense. However, I think becoming familiar with TA can make you a better investor.

Technical analysis is the strategy of reading price charts to evaluate whether a stock is a good investment/trade. Technical analysis is in contrast to fundamental analysis which is the strategy of studying a company’s fundamentals (revenues, earnings, etc.) to determine potential investments.

A lot of traders who hold stocks for a very short period of time (day traders, swing traders, momentum players) use TA as their primary evaluation method for buying or selling stocks. However, trying to consistently predict the price movement of a stock over a short period of time is very difficult, if not impossible. In fact I’ve read an article stating that most day traders lose all of their capital within a year. (more…)