The stocks markets run on several factors. There is not a single parameter that determines the direction or movement of stocks. There are multiple factors that need to be considered before arriving at a single decision to predict the market. The traders and investors often look invest in stocks in which they can make quick returns. But finding such hidden gems can be a tricky task.
In this article, we shall be learning about the concept of technical analysis. Technical analysis is one aspect or parameter of the stock markets that can help in predicting the movement of stocks just before they cut lose. The statistical and chart analysis of stocks are very popular these days. The reason being, in most of the cases they are right in predicting the future movement of the stocks.
Let us first understand the meaning of technical analysis.
Meaning of Technical Analysis
Technical analysis involves the study of different statistics and charts of different stocks to predict their future movement. Technical analysis helps in predicting the trends in the price of shares and inturn,helps the investors in taking the position. The technical indicators suggest the momentum in the stock that is expected.
The technical analysis uses historical data to study the stock. Different data like prices of share, volume, etc. are being looked into and based on the numerical available the future trend of the stock is determined. The technical analysis gives the list of shares that will appreciate and the shares that will go down. Thus, the investor or trader can look at the technicals available and take apositionin any stock based on the technical parameters.
The main technical indicators that the market analyst uses to determine the future trend of the market are as follows:
Charts are the most widely used technical analysis tool. They depict the volume and price of shares for certain period. Based on such data future movement is determined.
- Moving Average
Predicting the price movement of a share which is volatile is a very tricky task. To overcome that, the analyst uses moving average as a tool. The moving average takes the average of price of shares for certain period and compares with the period of volatility. Based on such comparison broad trend for the stock price can be determined.
- Momentum Indicators
In order to support the charts and moving average calculation, momentum indicators act as a helping tool. The momentum indicator uses the price and volume of stocks to form an opinion on theshare price of any stock.
Many times technical analysis is often confused with fundamental analysis of stocks. However, both the terms are very different from each other. Let us see the differentiation between the two types of analysis.
Fundamental Analysis vs. Technical Analysis
The technical analysis of stocks is very different from fundamental analysis. The fundamental analysis of stocks involves looking at the qualitative and quantitative factors that affect the share price. It involves profitability and performance of the company, different types of ratios, future prospects of growth, etc. Based on the analysis of the mentioned factors the share price is ascertained.
On the other hand, the technical analysis of stock does not involve any study of qualitative or quantitative factors. Technical analysis uses analytical tools to determine future price of shares. The tools may involve the use of graphs, chart, waves, etc. to find the momentum of the stock. The technical analysis is done on the principle that price of the stock moves in a circle. The job of technical analysis is to find the area of the circle where the price of the stock is currently trading and till where it can reach.
About Indira Securities
Indira Securities is a pioneer in providing diversified financial services. We have qualified professional management that gives a stock recommendation on the basis of technical analysis of the stock. We conduct a technical study of different shares to find the best investment or trading ideas for our clients. This provides a good opportunity for investors and traders to make ample profits. Our stock recommendations are given not only on our website but also on the mobile application. Our mobile application is easy to use and provides a hassle-free experience. Open demat account with us and avail our premium services. You can contact us by email or phone for any query or information.