The process of analyzing the stock market in a technical manner is one that is used a lot in this particular domain of stock trading. The process can be defined basically as one where you use historical data of the stock market in order to analyze stocks and thus make trading decisions that are better than what may have been possible otherwise. This particular process is based significantly on the basic principle that the prices of stocks can be determined more accurately by supply and demand rather than the true or intrinsic value of the company that is selling the stocks in the first place.
What does a technical analyst do?
In order to become a technical analyst, you need to take part in the best technical analysis course in Mumbai. As a technical stock analyst, you would be supposed to look at data such as trading volumes and movements in price as well as other sorts of historical data related to the stock market. You would have to do this over a certain period of time and in that particular period you would have to identify trends and patterns as well. You would then use these patterns and trends in order to predict subsequent movements in the prices of shares as well as the future ones.
What is the main idea behind the technical analysis of the stock market?
The underlying idea that drives this particular pursuit is that prices are not always totally random. Rather they are supposed to follow certain patterns that can be recognized. When you look at a stock chart you would be able to see that daily prices of stocks connect on a regular daily basis as well. In the case of stock prices, the daily movements in the same are connected to the actions that happened the previous day and the days before. The same principle can also be applied to stocks that move in a volatile manner. If you looked deeper into it you would realize that such analysis also provides an exceptional way in which you can analyze and read the true sentiment of the common traders.
This is especially applicable with regards to particular shares. This is because share prices are always moving north or south. It all depends on the traders who wish to either sell the shares or buy them. The patterns in prices are affected to a significant manner by the ways in which the sellers and the buyers respond to the same.
How do you use it?
The question that needs to be asked in this context is how it can be used in order to make trading decisions in the share market. The first thing that you need to do in this regard is to keep a tab on the trends of stock prices. Next, you need to learn about the resistance or support situation in relation to individual stocks. The final step in this process requires you to analyze the patterns. It may seem that technical analysis is boring and time-consuming. But a lot of traders have found it to be a lot more effective than fundamental analysis.