Happiest Post

Technical Analysis: What is Technical Analysis, How To do technical Analysis of stock

What is Technical Analysis?

In this article, we will talk about the technical analysis of a stock or company. We will also know about how to do technical analysis.
Technical Analysis

    Learn Technical Analysis with example

    What is Technical Analysis? Let us understand this with the Example of Cricket.

    If you are interested in Cricket, then you will know that, whenever a player goes to play in a match. So he definitely talks about the previous record and performance of the team he is playing against or on the field.

    And it is expected that the player plays well against that team or on that ground. So we express the possibility that the player will still do the same performance and show the game as he has done before.

    While this does not have to happen, no one can say 100% that result will be exactly the same as it has been many times before.

    If we look carefully, knowingly, or unknowingly, at the time of making such a claim, we are likely on the basis of Technical Analysis.

    Because the whole concept of Technical Analysis is this, "History repeats itself".

    Similarly, in the stock market also when it comes to buying or selling a stock. That is when it comes to putting a claim on a stock if we find out through a chart based on the performance of that share that the shares have been indifferent condition and now looking at the trend of the shares here Where the expressions can go (how much up or down), so that study is called Technical Analysis.

    Technical analysis chart types

    In technical analysis charts, some mathematical calculations are done by processing a lot of data at once and based on that we get the future price conclusion. Charts are used in technical analysis to easily visualize and understand a lot of data at once.

    There are three types of charts used in technical analysis :
    • Line chart
    • Bar chart
    • Candlestick chart

    Let us now look at these three in detail:

    Line Chart

    Line Chart in Technical Analysis
    As per any time frame in the line chart, a line is drawn joining a closing price of that time frame. And thus our chart is formed. If we make a chart like this, it will become a chart like in the picture below.

    With this type of line chart, we can understand the stock's trend at a glance, but it only covers the closing price. It ignores all three price points OPEN, HIGH and LOW. thereby reducing its reliability. And it doesn't let us talk about any future costs.

    For this reason, line charts are used almost seldom for technical analysis.

    Bar Chart

    Bar Chart in Technical Analysis

    Bar charts provide more useful information than line charts.

    In the bar chart, all four points of the stock price i.e. open, close and low, and high are covered, so we can do a better price analysis of the stock.

    The bar chart consists of three parts:
    • Central line
    • Right line
    • Left line

    Where the central line shows the low and high of the stock. Whereas the left sideline shows the open price of the stock. At the same time, the right sideline shows the closing price of the stock. A bar chart is better than a line chart and some traders use it.

    But still, it is rarely used in technical analysis. Because if the long time data are shown together in the chart then it becomes difficult for the new trader to understand it. And it looks too complicated, and the volume does not cover the point.

    For this reason bar charts are also rarely used when a better option is available in the form of candlestick charts.

    Candlestick Charts

    Candle Stick Chart in Technical Analysis

    Candlestick charts are the most popular chart options used for technical analysis.

    Candlestick charts provide up to a very advanced level of information in a clear and elegant way, while also eliminating the shortcomings of line charts and bar charts.

    Conclusion of Technical Analysis

    With the help of Technical Analysis, we can know when we should take the entry market and when to complete the transaction exit.

    In this way, with the help of  Technical Analysis, we are able to avoid that which causes 90% of people to lose, and with the help of  Technical Analysis, we understand that:-

    • When to buy shares?
    • Buy shares in what sense?
    • How much did you buy shares?
    • When to sell shares?
    • How do you sell shares?
    • How much did the shares sell?
    • And how to control your loss in case of loss?

    We hope you like this article very much. Feedback is kindly invited, post a comment. Thanks For Visiting.

    Happiest Post.

    Post a Comment