A stock trader goes for stock market technical analysis when he needs to determine a company’s prospective profitability. There are two options for stock trader to analyze the stock market, i.e., technical analysis and fundamental analysis. Here we go, expanding technical analyze might never have been as easier as you are going to go through here. Technical analysis is all about reading the historical returns in the form of shapes. Several shapes are used to make some patterns. These patterns allow you to judge the upcoming events in the stock market.
Stock Market Technical analysis only works when market does not fulfill the efficiency criteria. Investors only remain successful to yield through analyzing the market technically when the stock market is not efficiently working. It is because all the pertinent information has already been reflected by the stock price during the respective day. As a rule of efficiency, it must NOT have any relationship with the upcoming day’s stock price.
An attempt to make returns through successful technical analysis can only remain lucrative when you keep an eye over the everyday activity. Stock Market Technical analysis, in other words may also be referred as a short cut of fundamental analysis because of the belief that every piece of news has an impact over the stock price. But this is only an underlying assumption having a little implication in the practical scenario.
There are three following types of daily charts as follows:
– Bar Charts: it perhaps is the most popular and important kind of charts among the technical analysis believers. In a daily bar chart, each presented bar offers the understanding of one stock market trading day (or session, depends on the period for what the chart has been represented).
– Japanese Candle sticks Charts: This has grabbed the attention of stock traders in the a few previous years. Literally, there is little difference between the way candle stick chart and bar charts represent the information. But Japanese candle stick chart provides a better visual aid to the trading performance activity of all day long.
– Line Charts: These are the simplest and oldest kind of charts employed by stock traders in stock market technical analysis. It does not give the representation of entire scenario except the overall activity trend. They are also known as trend charts. They are best when stock traders need to have a bird’s view of the trading trend of successive session. It can broadly provides an overall representation.