Technical Analysis : Without this, even George Soros will fail
Technical analysis often amazes novice traders. Often the numbers mentioned as target price movements are achieved. Even if it does not exactly reach the expected number, at least only 5-10 pips away. For beginners, this is something magical.
Of course technical analysis is not a “scary science” in the style of a paranormal. There are no puffs of incense or incense. Technical analysis does not require “men” or mystical rituals such as asceticism on a quiet mountain peak or in a dark cave. There is no.
The fact is: technical analysis is a science that anyone can learn easily.
(I can see your forehead wrinkled. Some of you even grinned sarcastically. No, not you. What I mean is someone else.)
If it’s that easy, why do so many traders experience losses after losses so that they drain out their capital?
The answer is because they take the wrong way in studying technical analysis. Almost all beginner traders jump too far directly into the realm of practice, without ever wanting to learn the basics that must be possessed in conducting technical analysis. Like learning martial arts, like it or not you have to practice physically first, learn the horses, understand the steps, then apply the moves. In addition, you also need regular and continuous training. It’s impossible for you to become a martial arts warrior, choose to compete without going through these stages.
In trading too. Before applying technical analysis in trading, you must understand and master the basics first. Well, this time we will give you tips, how to learn technical analysis correctly. Without mastering these 3 things, even GEORGE SOROS will fail in trading.
1. Understand the concept of technical analysis first
There are three things that become the foundation of technical analysis.These three things are known as the Dow Theory .
The first: “everything discount market action”.
Women, control yourself. This is not a kind of discount in the mall.🙂
According to adherents of pure technical analysis, the change in price movements that we see in the graph is a reflection of all the information circulating in the market. The important thing is to go where prices move, not why prices can be like this or so. In essence, technical analysts do not really care about the news circulating as fundamental analysts.
The 2nd: “price moves in trend”.
Prices are always moving in a trend. There are at least three types of trends that you need to know, namely: uptrend, downtrend and sideways. Once you can identify the trend that is going on, you will be able to take advantage of the opportunities that exist.
The 3rd: “history repeats itself”.
Soekarno once said, “Never forget history.” Even in technical analysis this principle is used as a guideline. Market behavior is reflected in patterns of price movements that tend to recur from time to time. On our education page, you can learn about various candlestick patterns (candlestick pattern) and price patterns . If you can recognize a pattern, then you can estimate where the price will move. Thus, it is likely that you will be able to benefit from the next price movement.
2. Understand the concept of the trend first
Women are usually fluent in talking about fashion trends. The majority of them think that wearing clothes that are out of dat or aka “not trending behind ” is a taboo.
It’s not only fashion that recognizes trends; the forex market also knows it. In order to survive trading, you need to follow the current trend. Of course not a dress trend, but a “trend” of price Well, how do you survive? Follow the trend that took place at that time. If the trend is up (uptrend), then the most reasonable plan is to look for buy positions. Conversely, if the trend is down (downtrend), then the safest strategy is to look for short positions (selling).
How about sideway? There are two choices: wait until the trend is clear (it’s the safest), or “play tick-tock”, which is to sell near the resistance or buy near support.
3. Understand the concepts of support and resistance
If you observe price movements, you will find that prices never move in a straight line. There is always a time when prices stop moving up, then move back down. Conversely there are also times when prices stop going down and then back up.
We call the places of “cessation” by the name “arrest” or “prisoner”. Well, then we will recognize two kinds of “anchoring” price movements, which are called support and resistance.
There is a simple way to explain this support and resistance. Imagine that you are in a room that certainly has floors and ceilings. In your hand there is an object, such as a ball. If you throw the ball toward the ceiling, it is likely that the ball will come back down because it is stuck by the ceiling. Conversely, if you drop the ball on the floor, it is likely that the ball will bounce because it is held by the floor.
Support works like a floor. Support levels hold back falling prices. While the resistance works like the ceiling of the room, which restrains rising price movements. That is why the best level to take a buy position is in the support area, because it is likely that the price will move up again from there. Conversely, the best level to take a sell position is the resistance area, because it is likely that the price will move down again after being held back by resistance.
Even so, this support and resistance can not always withstand price movements. There are times when price movements are so great that they can break through the support or resistance defenses. To learn more about this support and resistance, please visit our education page.
Now, these three things you need to understand at least if you want to study technical analysis. In the next article we will discuss 5 easy steps to do technical analysis. Just follow our blog.
See you later.