The Realm of Stocks is Complicated

 Technical analysis has become an important aspect of the financial markets. There is little doubt that mathematical and statistical methods and trading models are becoming more widely used by traders and analysts. Technical analysis is used by a growing number of experts.

What is This Analysis?
Technical analysis is the study of charts and historical price action that helps traders and analysts determine what markets might do next. The basic idea behind technical analysis is that everything is discounted in price. In other words, if a trader has information that he believes will cause a stocks prices to rise, and he and other traders begin to buy based upon that information, the stock price will rise. It does not matter what that information is, but rather that the market rose. That is really all a market technician is worried about, that prices rose, not why they rose.

As prices rise, patterns begin to form. These patterns reflect the ebb and flow of the market and can be used to determine the strength of a trend, where a market might turn or stall, if a move is going to continue, sentiment, and many other factors.

Therefore, technical analysis of stock allows traders and analysts to study the market using historical data so that they can determine if a market is going to rise or fall without having to know every fundamental detail about that market.

Why indicators?
An individual may have done the research on a company, assessed their balance sheets, and taken into picture the P/E ratios and different projections. For some, this thoroughness is important when trading stocks. However, these fundamental factors do not tell the trader when to buy or sell the stock, when a trend is exhausted, or how much they should be willing to risk. Technical analysis gives them the answers to those questions.

Belief of Experts 
Professional and experienced traders believe that the first thing any trader must know about a market is its trend. A market can do just three things – it might go up, it might go down, and it might go sideways. Momentum indicators help a trader gauge trend direction and strength. Momentum indicators include such traditional studies such as RSI, Stochastic, and MACD, as well as more advance indicators such as the KasePO and KaseCD.

What is a Momentum Indicator?
A momentum indicator studies and measures the rate of change of price. There are various ways of doing this that are outside the scope of this article. Momentum indicators tell a trader the direction of a trend, its strength, whether price is overbought or oversold, and when a trend is becoming exhausted (using a technique called momentum divergence). Momentum indicators are extremely powerful tools that may be used to time entries and exits.

Conclusion 
The bottom line is that technical analysis and best trading indicators can help you become a better trader by helping you learn when to time entries and exits, how much risk to take at any given time, how strong or weak a trend is, and when a statistically significant turn is about to take place.