Technical Trading

Technical analysis is about how to measure price moves in the market based on the notion that all information about the fundamental factors and the expectations about the fundamental factors are reflected in the price. Technical trading is about how to be in harmony with the market. Let the market tell you how and when to take on a position.

Many traders are doubtful towards using technical analysis as a tool as they claim that fundamental factors are the sole reason for any market movement. That is excactly what technicians assume as well: fundamental forces are the sole reason for every long-term price trend. But how to measure for instance the strength of the trend or if it is likely to pause or even end, is greatly influented by the expectations of fundamental factors and human emotions like fear and greed - and those factors will never change. Technicians, like Fundamentalists, assume that the mass of market participant will correctly absorb, interpret and weigh the importance of each fundamental variable. The collective action of traders will directly affect the rate of change of the price over the long term and instead of directly analyzing the fundamentals, technicians monitor the price because they believe it will respond to the most important fundamental force.

Technical analysis is about how to be in harmony with the market. Basically, if the trend is up there are indicators and methods available to give buy signals and these signals are designed to asure that you always will be on the right side of a major move. If the market after a few days comes against your position - then cut the loss short and wait for the next opportunity.