As a beginner in currency trading, commercial browsing plans can be overwhelming – especially given the countless technologies and tools available.
Before diving in technology, it is important to understand what technical analysis is, the importance of the success of the transaction, and how it differs from the basic analysis.
What is technical analysis?
Technical analysis is to study market behavior mainly using plans to predict future prices. It depends on three basic principles:
- Market behavior is comprehensive
- Prices move in a direction
- History will be repeated
#1: Market behavior is comprehensive
This principle is the cornerstone of technical analysis. It believes that all factors that affect prices – whether essential, political or psychological – are reflected in market prices. In essence, the price behavior reflects the changes in supply and demand. For example, if the supply is exaggerated, the price will decrease. The charts do not cause market fluctuations. It simply reflects bullish psychology and landing on the market.
You may wonder about the difference between the technical analyst and the scheme analyst because they use technical analysis:
- GraphicPlans analysts are the people who use the plans to determine the patterns and trends in price movements. Planning analysts depend on technical analysis to make trading decisions and often use various technical indicators to help them predict future prices.
- Technical analystTechnical analysts are the people who focus on trading technology, including plans analysis, market trends and technical indicators. Technical analysts often use computer programs and trading programs to help them analyze price trends and make commercial decisions.
Usually, plans analysts are not concerned with the reasons for high prices or low prices.
#2: Prices move in the direction
The complete purpose of drawing a market price behavior scheme is to determine the trends at an early stage, thus conducting the target trading. There is a reason for the hypothesis that the prices are moving in a direction –Trends in movement are likely to continue instead. Of course, this reasoning is a adaptation of the Newton’s first law.
Another way to express this reasoning is that the trend in the movement will continue to develop in the same direction until it is reflected. This is another technical claim that looks almost periodic. But how to track the entire trend depends on following the direction before the current trend shows signs of reflection.
#3: The date will be repeated
An important part of technical analysis includes the study of human psychology, which tends to stay unchanged over time. The idea is that the patterns and behaviors that were effective in the past are likely to be effective in the future. Understanding the past will help predict future market trends.
A common example is reflected in the repetition of history in the bitcoin cycle, such as height before half, followed by a re -accumulation after the height and the subsequent.
Technical analysis and basic analysis
Both approaches try to predict the market to solve the same problem – that is, to determine the direction in which prices may move. However, it is analyzed from different views. Below is a schedule for major differences:
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