Stock Trading ? Technical Analysis For Fun And Profit

How do you scrutinize the stock you're considering buying as an investment vehicle? More and more traders are finding out that an excellent way to perform their analysis is technically rather than fundamentally. As a devout technical analyst, I believe there are more and quicker profits as a reward to the trader using the technical approach to study stocks. Even the most fundamentally sound stock may not be in favor and may not gain in share price for quite awhile. But when a tradable stock is found using technical analysis, the move will happen soon or most likely won't happen at all. No more buying stock and waiting for a gain that may not happen. No more shotgun approach and diversifying to overcome the losses you hold in your portfolio. The technician lets go of losers quickly while letting their winners run. It's an active approach to trading stocks, options, forex and commodities. Besides, technical analysis is much more enjoyable than pouring over a company's profit and loss statement!

Proper technical analysis is the study of an equities chart and forecasting probable price moves based on patterns exhibited on the chart. To be a successful technician of the markets it's best to keep things simple. One of the pitfalls a budding technical analyst has to overcome is the massive amount of information on the subject and not falling prey to the "holy grail" syndrome. Many people have forgotten that the most important considerations of the stock chart are price and volume. While indicators may be helpful to some, others have tried to use them as a timing system almost to the exclusion of the price chart itself. Indicators are mathematical algorithms of price movement, volume or a combination of both. They where meant to be used as a tool to help the trader validate what they see on the chart, NOT to enter a trade. The most probable trades come from the price chart itself. The price chart tells a psychological story and trades should be based on the confirmed break of a pattern such as a head and shoulders or bearish wedge.

The satisfaction of mastering the craft of technical analysis can't be overstated. It's very satisfying to find a stock that screams "buy me" and then watching as the price breaks out of a trading range and clocks ten to fifteen percent over the next few weeks. Learning to read charts takes time but not an eternity. The key is to spend some time each night studying stock charts and over time you will begin to recognize the technical patterns that tell you if a stock has bottomed, topped out or will continue its trend. Keep it simple, learn to think for yourself and soon you will be on your way to successful trading with technical analysis.

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