Technical Analysis !!!👨🏫Hello, my trader friends🙋🏻.
I want to tell you the story of Technical Analysis, its advantages & disadvantages.
We're even gonna learn about its branches.
Like any other science, Technical Analysis has come a long way, and it's still evolving. But why should we learn it and know it well?🤷🏻
When you're trading, you may be afraid or greedy. But how do professional traders control these two?🤔
Let me start with a simple example.
If someone turns off the lights & challenges you in a new room, you will feel scared or lack confidence because you don't know that place. But if the challenge happens in your bedroom or home🏡, you'll feel more powerful 💪🏻 and confident because this environment is familiar & you can act better.✅
Fear is caused by the unknown. When you don't know this market, you can't get good results (or at least permanent good results).
So follow this page to conquer all the peaks⛰️ of Technical Analysis together🙌🏻 and learn from A to Z of it.
Also, I'm a fellow traveler on this route🛤️, not your tour guide.
So, if you have any questions, ask me in the comments💬.
My trader fellas, let's take one step👣 at a time because taking long and hurried steps will only hit you harder. I'm with you in all these steps🪜 & get started with the first type of market analysis.
Technical Analysis is old. I mean, it's almost 300 years old📜, but it doesn't like to talk about its age, so we couldn't find the exact information about its birth date🗓️😑.
Maybe it’s from Japan⛩️🎌 and was born in the 18th century, or perhaps its date of birth is in the Middle Ages.
But there is some more information that I'm sure about. For example, in 1879, the Technical Analysis found a friend by the name of Chart📈, and they have not separated until today.
Let's skip this story and be serious☺️. Technical analyzers believe that everything is in the Chart.
In Technical Analysis, there is all the necessary information for trading, such as entry points, exit points, market volume, stock prices in the past and present, etc. (The Chart is a complete encyclopedia for Technical analyzers!!🤦🏻😶 )
There is another type of analysis that examines the available information about a stock (from the founder of a stock or company to the cost and income and even the company manager's records), called Fundamental. But the Technicalists say that even some of the Fundamental information is in the Chart! 😐
Overall, Technical and Fundamental are both complementary to each other and opposite to each other. But both are related to the Chart. (These three have a complicated relationship; I mean, there is a love triangle, so we should stay out of it !!🤫😂 )
Let's skip the joke. All these things are just like the gears⚙️ of a car, but it's not enough. You need to follow more rules in the market to pass the finish line🏁 with your trading car🏎️ . Don't worry cause I'm gonna tell you everything you need to know to win🏆 this trade racing with your strategy car.
Now that we have learned a little about the history of Technical Analysis, it is better to learn about its contents.
The price chart, our most important resource and tool in Technical Analysis, consist of the price-time, Charts, and Candles.
But these candles🕯️ existed 100 years before bar and dot charts.📊📉
In 1700, a Japanese man named Huma realized that the price of rice depended on the emotions of traders in addition to supply and demand.
Candles show these feelings with their colors.
For example, the green candles🟢 show trust and good feelings among people who invested in a stock.🤑
But red candles🔴 indicate doubts or hopelessness of people about a stock, and they sell it.😞
I don't know why I remembered Moody's octopus doll🐙 :)
But candles tell you the feelings of other traders just like these dolls. But only its color is not essential.
Can you guess the other important factors about candles? I will tell you the rest of them soon.😉.
Have you heard that history repeats itself?
By looking carefully🧐 at the old charts, some creative people found that the prices behaved similarly to their past.
They realized that the candles make interesting shapes next to each other, and they made these shapes repeatedly in different periods.🔁
They formed different geometric shapes and patterns & continued to make these shapes until today :)
Let's accept that the Chart is creative and artistic! 🎨🖌️😊
For example, they found a shape called a Head & Shoulders Pattern. This type of pattern will cause a downward trend⤵️ in the Chart.
I tried to find it & place it on someone's Head & Shoulders to remember it better. 😁
Many patterns can be found in any chart, and I have already taught the reversal patterns in my previous posts, But I want to go over all the patterns in detail again in the future, so let's dive into the other contents of Technical Analysis.👇
Using formulas, mathematical🧮 ratios, and advanced calculations, indicators were created that can generally show the market's present and past and give a relative opinion about the future (Please don't get the indicators wrong with magic 8 ball🎱 or Professor Dumbledore's wand✨. )
Let's be serious about it. Maybe you know that indicators depend on the two factors of time and place of price.
In terms of time🕦, they are divided into two categories: leading and lagging.
In terms of price movement💹, they are divided into three categories: trend indicators, oscillators, and volume indicators.
The indicator that I made the above meme for is a leading oscillator.
Now it’s time to go for the other various tools that are made by using numbers🔢 and people’s actions in the market.
A person named Nelson Elliott made a useful tool, although, after his death, many people worked on this tool and improved it until today it reached us, but we are going to discuss it better in the following posts like the rest of the contents of Technical Analysis.😉
But I have to say Elliot believed that the market is not disordered and always repeats a repetitive cycle, and Eliot called these repeated movements waves.
According to him, if you can perfectly identify the repeating patterns in the price, you can predict how the price will change (or not change) in the next phase.
Eliot published his experiences and theories in a book called the waves principle, which I recommend if you want to get good information in this field; it's better to start from the origin of this theory.
I think there is no better definition for the word "Wave" than sea waves🌊, and I tried to draw Elliot waves like sea waves reaching the shore. 🏖️
In the end, I want to say that whatever style of analysis you have or whatever type of Chart you use, in the future, this machine will not go the right way without following a series of principles.
Suppose you have the best car in the world, but you neither know how to drive nor the rules. It can be guessed that you will either crash with someone or break the car💥.
You should have risk management along with your trading system, and don't forget that no trading system is perfect.🙅🏻
It is better to try each method on demo accounts before making real trades.
Of course, you can count on me and ask any questions you may have.🙂💭
In the following posts, I’ll talk more about the things that have been said and introduce you to good trading systems that can be obtained from any method.
I'm by your side so that if you are a beginner, you can find your own way, and if you know the market, we can learn the basics of this market better & together🤝🏻.
Wish you happiness, health & success guys🙋🏻.
