Technical Analysis | Evaluating Securities | Finance Strategists

hi i'm rainey with finance strategist in this lesson we're going to cover [Music] technical analysis is the practice of evaluating securities by analyzing their price and volume behavior and identifying price trends this is contrasted with fundamental analysis in which investments are evaluated by the financial performance of a company as evidenced through fundamental ratios such as gross margin and roi technical analysis is predicated on the assumption that a securities price and volume history can serve as an indicator for future price movements technical analysis assumes that trading behaviors of other investors occur in patterns and that history will repeat itself [Music] technical indicators are often based in statistics and can be overlaid onto a chart examples of technical analysis indicators include trend indicators such as moving averages and macd moving average convergence divergence momentum indicators such as stochastics and rsi or relative strength index volatility indicators such as bollinger bands and average true range volume indicators such as volume rsi and obv on balance volume while many sophisticated indicators exist some investors using technical analysis rely primarily on detecting trends and simple support and resistance levels generally fundamental analysis is used to focus on a securities long-term profitability whereas technical analysis is used for anticipating short-term patterns which can be leveraged for short-term profits shorter-term trades include day trading which are trades held for less than a day up to a couple of days and swing trading which are trades held for a few days up to a few months technical analysis has several limitations first a major event or news update can completely alter the securities landscape nullifying all technical analysis additionally technical analysis can be a self-fulfilling prophecy if enough investors are using the same technical indicator price movement may follow the indicator due to the popularity of the indicator rather than its actual ability to predict future price movement when this happens investors may learn to act preemptively which may undo the usefulness of the indicator [Music] let's hear from you do you prefer fundamental analysis or technical analysis when trading securities leave a comment below [Music] for more information visit finance strategists strategies for you

test attribution text

Add Comment