Introduction to technical analysis
What is trading and technical analysis? Immerse yourself in this first article to discover the basics of this discipline!
3 min read
Although we're hearing a lot about trading these days, it's important to remember its definition:
So, what is trading?
Here, Trading is the activity of buying stocks/cryptos/derivatives with the aim of selling them at a higher price. Trading can be carried out over different periods of time, from a few minutes to a few months or even years, in which case we'd call it investing. It's also possible to bet on the downside of certain assets - this is also trading.
However, before embarking on this discipline, you'll need to learn and implement a number of absolutely fundamental rules and principles if you don't want to lose your life savings.
Trading (and investing) is based on technical and fundamental analysis of the asset in question. Whether you're hoping for a rise or a fall, the fundamental work will be the same. On this site, you can learn the various steps at your own pace through our many articles detailing the many facets of traditional and crypto financial markets.
Let's start learning now! What is technical analysis?
Technical analysis is the analysis of an asset's price chart, enabling the interpretation of different signals.
T.A. (for technical analysis) is absolutely essential if you want to get started in trading, but can be perilous for many beginners, so take your time. It's generally done using Japanese candlesticks and various technical indicators.
For example, a "daily" candle represents 1 day, while a "weekly" candle represents 1 week, and so on. A candle can represent 2 days, 1 month, or even smaller time units such as 4 hours, 1 hour, 30 minutes, 5 minutes, etc.
Japanese candlesticks are the form most widely used by analysts and traders alike, simply because it's the representation that provides the most precision thanks to the body and wicks.
As you can see, the graphs are a series of candles, as shown in the photo below!
At first sight, it may seem complicated to make these graphs talk, and indeed it's no simple matter, but with the right tools, practice and perseverance, anyone can do it!
You've now understood the very basics that will enable you to start analyzing graphs!
Next, on this site, you'll discover how, by drawing lines and using different indicators, curves can speak for themselves and indicate probabilities on which you can bet to try to win money!
It's important to understand that technical analysis won't give you signals that will work all the time. However, it does give you probabilities, which, if properly studied and combined with good risk management, will enable you to make your capital grow.
I'll now let you take your time to discover the next articles in this section, which will introduce you to the different chartist patterns you need to know about, what probabilities they give us, how to recognize them, and how to trade them.
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