Strategies for Beginners While Learning Technical Analysis

Most investors analyse stocks based upon their fundamentals like valuation, revenue, or industry trends, but the fundamental factors aren't reflected in the market price. The technical analysis course helps to predict price movements by examining historical data, primarily volume and price.

It helps investors and traders navigate the gap between the market price and intrinsic value by leveraging techniques such as behavioural economics and statistical analysis. The maximum of the investors uses both fundamental and technical analysis while making decisions.

Strategies that beginners should always keep in mind

1- Make a strategy or develop a trading system

This is the first step that an individual needs to consider. For instance, a trader might decide to follow a moving cross over strategy, where he/she will track two moving averages on a particular price movement.

For this plan, if the 50-day, the short-term moving average goes beyond the long-term 200-day moving average, it indicates an upward price trend and generates a buy signal. The opposite is true while selling.

2- Take a close look at the securities

Not every security or stock will fit with the strategy mentioned above, perfect for highly volatile and liquid stocks instead of stable or illiquid stocks. Different ones need different parameter choices.

3- Monitor and track trades

Depending upon the strategy, traders might require different functionality levels. For instance, day traders would need a margin account that offers access to Level II quotes and market maker visibility. But for the above example, a primary account may be preferred as a lower-cost option.

4- Look for the right brokerage

Get the right account for trading that supports the selected kind of security. It should offer the functionality required to monitor and track the selected technical indicators while keeping the low costs to avoid eating into the profits. For the strategy, a primary account with moving averages on candlestick charts is going to work.

5- Use additional tools or software

There might be other features that are needed to maximize performance. Some traders might need mobile access or alerts to trading on the go, while others may leverage automatic trading systems to execute trades on their behalf.

Risk factors and tips

Trading can be difficult and challenging, so it is essential to learn wisely whatever technical analysis course offers and do your homework carefully beyond the points mentioned above. Other considerations include:

Understanding the underlying and rational logic behind the technical analysis

Practicing trading in a demo account before committing real capital

Being flexible and thoughtful about future needs and scalability

Back-testing the strategies to check how they would have performed earlier

Being aware of the limitations to avoid surprises and costly failures

Most investors use both technical and fundamental analysis when making investment decisions. After understanding the technical analysis, investors and traders can improve their long-term risk-adjusted returns. It is essential to practice and understand these techniques before committing real capital to avoid costly mistakes.

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