gadget.royaltekno.com– 5 myths about technical analysis that traders need to know. Choosing the best analytical techniques to use in trading can be difficult, especially for beginners.
Before embarking on an analysis, it is important to consider the origins of different analyzes and their pros and cons. In general, technical analysis and fundamental analysis are two types of analysis used in Forex trading.
As far as technical analysis is concerned, it is preferred by technical experts (as users of technical analysis) because it is the easiest to find entry points, enough to trade stocks and can display forecasts of price movements with 100% accuracy.
But did you know that all these arguments are just myths of technical analysis? The facts on the ground do not support your position.
5 myths about technical analysis that traders need to know
A. Intended for short-term trading only
Technical analysis is commonly used as an adjunct to short-term trading. They believe that technical analysis will be a great tool for determining entry positions and should be used in conjunction with short time frames such as Hourly or even 1M.
This special analysis is also suitable for the use of scalpers and day traders. Is this true? Technical analysis seems to have existed for a long time. Even ancient engineers preferred to use this analysis for long-term trading and investing.
For them, technical analysis can be useful for reading the main trend, which allows them to understand the state of current price movements. Using long-term financing (For more information, see Corvin Codirla Forex Investment Strategy).
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Based on the above two comparisons, we can conclude that technical analysis is not only applicable to short-term trading. On the other hand, technical analysis can be applied to almost any time frame, including 1 minute, daily, weekly and monthly.
The most important thing is to understand why you use technical analysis at all, whether it is short-term trading or long-term investment.
B. The retailer is the only one who can use it
Another common misconception among retailers is that technical analysis can only be used by retailers. Retailers believe that major participants in the Forex market cannot use technical analysis because it is so simple and straightforward.
Technical analysis is also used by forex traders and hedge fund managers. Technical analysis is very popular and is used by almost all levels of forex traders, from retailers through multinational corporations to top hedge fund managers, precisely because of its simple, direct and clear nature.
C. Has a low success rate
Almost every technical trader has uncovered this third myth. The reason for this is that technical analysis is what leads to their commercial success.
With this analysis, retailers can better predict price movements compared to other types of analysis. Hard to believe, right? This is known as Jack D.
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Schwager is a successful trader who uses technical analysis and is the author of books on the subject. In his book “Market Wizards: Interviews with Top Merchants,” Jack interviews several other successful technical marketers, including Ed Seyko, Bruce Kovner, and Michael Marcus.
When used in divergence analysis, technical indicators such as stochastic or relative power index (RSI) are in fact the leading indicators. These two types of technical indicators will be very useful for you in trading, as they show the strength of the current market momentum.
D. As a stock trader, technical analysis is sufficient
For most traders, just a technical analysis is enough to start their forex journey. Technical analysis, in addition to being easy and fast to learn, is considered to be able to show current market price conditions.
In practice, if they are armed with technical analysis, they do not have to use additional “spices” during trading. On the other hand, the facts show otherwise.
Although technical analysis is simple and quick to learn, it is not advisable to start trading solely on the basis of technical analysis.
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Since technical analysis is only used as a tool to support your trading, it would be better if your trading activity was maximized with a better understanding of risk management and money management.
Other trading results can be expected if you have discipline and consistency, manage your emotions well, and don’t give up.
E. Technical analysis software can be profitable
“Gain access to detailed technical analysis and trading signals for your trading success” is a common belief found on forex trading sites and the like.
If you have trouble making a decision, you may be persuaded to use promoted technical analysis software. Easy Trader
People who are interested in earning money without complicated analysis are usually beginners.
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In fact, the use of technical analysis software does not always give advertised results. The software provider can only display trend and candlestick charts.
It would be better to just take an indication of the trend conditions shown in the chart and then decide for yourself the implementation process.
Seasonal conditions can also be used to predict movement. It is important to note that the use of technical analysis does not apply to all markets, as each market has its own characteristics.
Thus the discussion we can convey in the presentation of the information this time from 5 myths about technical analysis that traders need to know. Hopefully, what has been conveyed can be useful and understands what has been conveyed.