| The best method to foresee stock trends is through | | | | strategy. This is primarily what stop losses are. |
| technical analysis. It is common practice in the stock | | | | Traders will have a minimum price of where a stock |
| market and allows investors and traders to predict | | | | can reach before they exit to cut their losses. |
| stock fluctuations by studying charts and various | | | | There are many indicators when it comes to studying |
| indicators. Technical analysis is completely independent | | | | charts. The main and most common indicators are |
| of any type of research on the company's intrinsic | | | | based on 'Support' and 'Resistance'. Most stock prices |
| value or the field and type of business they are in. | | | | fluctuate up and down, so when a stock is moving |
| Technical analysis only looks at past price and volume | | | | down is does not technically indicate that it is on a |
| movements of the company's stock. | | | | down trend and vice-versa if it is moving up. Stocks |
| Investors who use technical analysis are usually | | | | generally move in wave patterns and remain |
| short-term traders who only hold their position for | | | | between their support and resistance. If a stock |
| short amounts of time until their desired price target | | | | breaks either then it is said to have a new support |
| is reached. It is not recommended to use technical | | | | resistance and this price can be predicted. These are |
| analysis for long positions because it does not | | | | times when a lot of traders will have to choose to |
| account for the work the business does. This | | | | hold their positions or leave. |
| typically means it doesn't look at factors like | | | | Charts |
| company's growth projections or future goals. | | | | Technical analysis is strongly dependent on studying |
| The whole foundation of technical analysis is | | | | charts to track stock movements. Bar Charts are |
| supported under the idea that share prices move in | | | | commonly used for beginner traders. A bar chart will |
| patterns determined by how the market sells and | | | | generally consist of bars which show the opening and |
| buys stock as a whole. It takes the entire market as | | | | closing price and whether the price has fallen or risen. |
| a collective person that has a resounding trading | | | | Another, more useful chart is the candlestick chart. |
| pattern. This is primarily based on market psychology | | | | This is a Japanese form of technical analysis that has |
| and past market behavior. This also accounts for | | | | growing popularity in the west. It is said to be more |
| historical events like natural disasters or economic | | | | accurate in predicting price movements compared to |
| crises and how the company's stock movements | | | | bar charts. Each candlestick shows the stocks |
| have reacted accordingly to each of these events. | | | | opening and closing prices in the 'candle' and also |
| This study of the market is vital for any successful | | | | shows the highs and lows of the day in the 'flint'. Red |
| technical trader. The key to good trading for | | | | or black candles indicate that the stock closed lower |
| technical analysts is to know the best times to enter | | | | then it opened and white or green 'candles' indicate |
| the market and how long to hold their position so to | | | | the opposite. Each of these candlesticks is an |
| make a profit. | | | | indicator of future movements. A small red bodied |
| When a trader understands these patterns they can | | | | candle with small flints is a sign of a downward trend. |
| generally predict how share prices will turn and use | | | | A green bodied stock with short flint however |
| this knowledge to their favor. This will tell them what | | | | indicates an upward movement is coming. There are |
| items to add or remove from their portfolio. | | | | many other candlestick indicators like shooting-stars |
| Generally if traders are wrong about their predictions | | | | and hang-mans that predict different movements. |
| they should keep fail-safes and have a viable exit | | | | |