Technical Analysis – The Basics of Financial Analysis

On a larger scale, those entities that monitor investment patterns may be interested in a career in technical analysis. While fundamental financial analysts are more concerned with the numbers included in dividends, new products, earnings and prices, technical analysts work with the psychology that drives supply and   demand. When you look at the stock market, it’s important to remember that stock prices are set entirely by what investors are willing to pay. Thus, to best be able to determine what the stock market will do, you have to understand behavioral patterns of investors.

There are many tools at the disposal of someone who is conducting a technical analysis. Chart patterns are one way of keeping tabs on various technical indicators. Some of these may include the buying patterns of investors, including the cash in their brokerage accounts, margin levels, and current state of liquidity. It’s also important to be able to tell whether investors are currently in a thrifty state of mind, or if they are feeling more optimistic. There is a seemingly infinite number of variables that could go into this, and the only way to make it manageable is to analyze past behavior patterns.

Financial charts help to provide a visual for this analytical study, and are one of the most important features of any technical analysis program. With today’s technological influence, it makes sense to use the powers of technology to quickly run through the numbers and charts that are available. This helps analysts to reach conclusions more quickly, which for quick-acting day traders or others who buy and sell rapidly, is extremely important. It takes a combination of a program that can churn out these charts, and the ability to analyze these results, to come to helpful conclusions for investors.

Those who decide to study the field of technical analysis will find that they spend a great deal of time analyzing these charts, in fact. There are certain well-recognized patterns that tend to emerge, which helps make analysis in the future much easier. However, even those with no formal training in this field will find that they are able to gain some analytical perspective with the help of automated trading programs, which give you the same results. Be sure to inspect your current software for this feature, and put it to use if available.