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Technical Analysis And Emotions In The Stock Market

Technical analysis is a statistical discipline that can, used correctly, forecast the rises and falls of stock prices. The discipline uses past market data and human psychology to predict trends in the stock market; traders can use technical analysis to cash in on the “next big thing” by following trends and then jumping off when the trend is fading.

Technical analysis isn’t just useful for predicting trends in stocks and shares, it can also chart and predict cycles and trends between different currencies. Forex technical analysis can come in both long term and short term forms, from several weeks to a few hours, and can help Forex traders jump on and off positions in time to make a decent profit.

Forex technical analysis is seen as especially reliable as it works within a 24-hour market, giving it much more raw data to be processed and analysed. If you’re a fan of technical analysis, Forex is ideal for you, as you can use the wealth of charts and indicators to your heart’s (and your bank account’s) content.

According to market experts, history always repeats itself, and investors repeat the behaviours of their forebears; they have hopes and fears, and often act almost irrationally, leading to huge slumps or rises. Chartists can use technical analysis to gauge the mood of investors on a wide scale, and predict price patterns. Even seemingly chaotic systems like the stock market can be studied and understood with the help of technical analysis; products and crazes may come and go, but human nature is the common factor in trading, and that doesn’t change.