What is technical analysis?
Technical Analysis is the study of market action, primarily through the use of charts, for the purpose of forecasting future price trends. Its various indicators point out the right timing of when to BUY and when to SELL.
In Technical Analysis, price and time is at the core of all charts and tools used. This is the reason behind the simplicity of the system. No matter how complex a chart may appear at first, technical analysis clears the picture using tools and formulas based on price and time to produce accurate market predictions.
Technical Analysis holds true that all market direction is determined by mass psychology. Price is therefore seen as resulting from a group consensus. Should the psychology of the masses change, prices will change accordingly. Since it is possible to predict mass psychology and express it in terms of probabilities, it is also possible to predict future price direction based on these same probabilities.
A great misconception about Technical Analysis is that its methods are or claim to be 100% accurate. Others often believe a technical analyst has blind faith in his methods and that he expects never to be wrong. This is far from the truth. Technical Analysis is about probabilities and when you have measurable probabilities you can use this data to make decisions.
An important feature of Technical Analysis therefore is money management. Theorists may strive for perfection in their predictions but a technical analysis trader expects that he will be wrong a certain percentage of the time. But even a trader with more losing than winning trades can be profitable by applying a sound money management system. At Smartline’s Technical Analysis Seminars you are taught how to ensure that your return on winning trades far exceeds any losses on losing trades.