What is Analysis?

Stocks Analysis Strategies

Stocks Analysis is the science and art of forecasting future price movement based on historical prices combined with Stocks technical indicators. Analysis Course - This Analysis study often interprets the price data by studying a chart & looks for patterns and signals for buying & selling.

The history & origin of this Analysis method dates back several hundred years to Japanese & Arabian markets, Analysis involves using mathematical manipulation of price data to optimize buy & sell points. The use of this type of Analysis in modern computerized programs has become increasingly popular.

The information which the is studied and assessed is price movement so as to plan an entry or exit into a trade. The goal is to determine how the market is trending.

What Does It Really Measure?

This Analysis - studies the supply & demand of a instrument in an attempt to determine in what direction the price will continue to move in.

While technical analysis deals with price and indicators it is just a measure of investor sentiment.

What to Look For

Find the Trend

The motto of technical analysis is: "the trend is your friend." Finding the prevailing trend will help you become aware of the overall direction and offer you better stocks opportunities - especially when shorter-term market movements give conflicting signals.

Daily charts are more ideally suited for identifying long-term trends. Once you've found the overall trend direction then you generally open buy or sell orders in that direction.

Trend or Range

No matter what price is doing, it usually falls into one of these two categories. If the price is heading in a pattern setup or in one direction, you can use trend lines to analyze where the price should go. If the market seems to be bouncing back and forth in a range, you can use support & resistance lines to make note of where to open buy or sell trade orders.

One of the greatest goals of Analysis studies & techniques in the market is to determine whether a given instrument will move in a trend in a certain direction, or if market will move sideways and remain range-bound. The most common Analysis method to determine this is to draw trend lines which are used by traders to determine whether or not the current direction of the market will continue. Many investors avoid trading in a range-bound market and only buy or sell stocks when there is a trend since this makes trading more predictable.

For technical analysts the most important stocks tool is the chart. The purpose of a chart is to provide a visual representation of price quotes (drawn on the y-axis) against time (drawn on the x-axis) for instrument, this chart is used as a basis for making predictions of the future price direction.

Stocks Trend-Lines

The direction of these trend lines determines the market direction. A trend line drawn moving upward represents a bullish market and a trend line drawn moving downward represents a bearish market.

Support & Resistance

Support & resistance zones are points on a chart that tend to act as boundaries. A support zone is usually the trough or low point on a chart whereas a resistance area is the high or the peak point on a chart. These support and resistance areas are used as buy/sell points.

MAs Indicator

Moving averages indicator are used to show the average price of a instrument over a given period of time. Moving Averages indicators are called moving because they reflect the latest average in the movement of the prices.

Stock Strategies

To be a successful trader you need to create a strategy. There is not one set strategy that is good for all traders. But Rather, each trader needs to develop their own strategy.

Stocks Analysis is the most widely used strategy in the market and is used to decide the entry and exit points.

Market movements have identifiable repeating price patterns that have been studied over many years providing a thorough understanding of these market trends and how they can be used to form the basis of a good trading trading strategy.

There are many Analysis tools available provided to facilitate this study

The beginner trader is advised to study each Analysis tool separately to get working knowledge of the concepts and application for each Analysis study. Once you understand one Analysis method, keep on using it while studying others. Each Analysis tool tends to combine well when used with other Analysis Tools.

Support and resistance levels are also used in many trading strategies. Support is defined as the level that is repeatedly seen as the bottom (floor) - when the price reaches this level it tends to bounce. Resistance level is the ceiling, the upper boundary (ceiling) that a instrument rarely trades above.

Support and resistance levels are valid for a period of time, until they are broken, When the market breaks through these support and resistance levels, the price is expected to continue in that direction. For example, if the market rises above the previous resistance level, it is seen as a bullish signal and the bullish movement should continue upwards.

Longer chart timeframes establish more stronger support and resistance levels. traders can use these support and resistance levels to determine when to enter a trade position or exit an open position.

Moving averages is another common indicator used as to create strategies. Moving averages try to smooth out short term market price fluctuations giving a clearer picture of the price movements and trends. Traders can draw SMA to determine price movement tendency to move up or down - trend.

If price crosses above the simple moving average then it will keep on moving up.

If price crosses below the SMA then it will keep moving down

These are examples of strategies that can be used individually or combined.

Stocks Traders use two or more Analysis studies to determine when to open an order when both Analysis indicators that they are using support the same direction. If several Analysis indicators show that the market is moving towards a particular direction the a trader can trade with more reassurance than when he is only relying on one Analysis indicator.

Fundamental analysis should also be used together to reinforce Analysis findings, or vice versa. A trader should ideally take into account two or more Analysis indicators when developing a Strategy.

Every strategy should provide clear guidelines about when to enter and exit a buy or sell trade position, how much loss can be accepted if the market moves in the other direction and how much profit is expected. Following these simple Analysis guidelines can help you become successful in stocks.