Is Technical Analysis Reliable?

Before entering the world of trading, someone may ask themselves: Is there a way to guarantee a profit and avoid losses at any point in time? Unfortunately, those who become traders find out that losses are inevitable, especially at the early stage of they’re trading career and for those who put a lot of money in. It isn’t possible to guess exactly the way the market is going to trend and how the prices are going to change, but technical analysis is a tool that allows traders to improve the forecast how the prices will look in the future, and the most ideal time to buy and sell. 

Technical analysis is a tool that allows traders to improve the forecast of how the prices will look in the future, and the most ideal time to buy and sell

It’s very easy for a trader to be introduced to technical analysis and solely use it to make decisions, but this will lead to frustration in the future and the need to gain more. For those who think big and want to gain the most out of what trading has to offer, it is important to expand your horizons and take advantage of all the different strategies that can be used to make trading a more pleasant experience. There is no one hundred percent guarantee that everything will go perfectly well if you implement strategies like technical analysis and others to the best of your ability, but it will put you ahead of the game, especially against those with less experience and/or drive to win. 

Reconsider Fundamental Analysis as well   

Technical analysis has its benefits, but as mentioned before, isn’t reliable enough to be the only method used to gain the most out of the trading world. Unlike the study of trends and chart technical analysis, fundamental analysis focuses on a lot of the real-life events that may not be recognized from a chart. Some of these include economic data, monetary policies, management quality, and annual reports. Instead of focusing on price development and general market dynamics, fundamental analysis looks at the macro and microeconomic connection. Using this method of analysis along with technical analysis will help to make decisions with medium and long term investments. 

Is Technical analysis by itself a reliable tool for a trader to use on a daily basis? No, but is it reliable with fundamental analysis being its supplement? Yes. It is important to remember that technical analysis focuses on entry and exit strategies as well as predicting price changes, but using this as your only source of information will leave you behind and prevent you from future success. 

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