Technical analysis for beginners: where to start?
The basis of intraday trading is technicalanalysis. For beginners, the most important thing is to start with its development. Thanks to the technical analysis, you can learn to understand the graphs and predict the price changes.
What it is
Technical analysis is an approach based onwork with various charts, oscillators and information related to the history of prices. Without it, adequate trade, predicting the value of currencies and understanding the market are impossible.
Includes many methods, for example,figures of technical analysis, ways of displaying information (Japanese candles, bars, lines, area, Heiken Ashi indicator, etc.), as well as hundreds of popular indicators, drawing tools on top of graphs and much more. Its essence is that the trader finds certain patterns in the available information, and on the basis of this a forecast is born.
Where technical analysis is needed
It can work almost everywhere: currency, urgent and stock markets, resources, goods - in general, any data on the chart. Why is it needed? To predict the further behavior of the price. For example, if you take the euro / dollar currency pair and the data on it for a certain period, then based on them you can build a forecast of the price behavior in the future. There is no fundamental difference with which instruments of trade you will work: futures, options, or even with "Forex". Technical analysis is your assistant.
Technical analysis for beginners is the headpain. It can and should be studied indefinitely, during all the work connected with trading. If you choose this path, then you need to improve constantly.
The work is quite hard and requires diligence. Infinite graphs, numbers, various additional tools, programs, robots and much more - all this is technical analysis. The course for beginners should contain at least the basics, namely: Japanese candles, trend lines, support and resistance, the simplest indicators, the concept of a timeframe and some other things.
Types of graphs
Actually, there are not so many of them. The most popular option is Japanese candles. By the way, they appeared even before the birth of trading, exchanges and the Internet. The second option is the bars. These are stripes with lines. They are somewhat similar to candles, but have a different appearance, although they show the price of opening and closing in the same way. There is also a simpler version, which is so popular with beginners, but it is practically useless. This is the usual line. On it plainly it is not visible anything, to trace any figures of the technical analysis it is practically unreal, the maximum it is possible to understand a current direction of the price. Nevertheless, any options have the right to life. There are other more exotic types of charts, however they are unpopular.
Many will be scared off by such a complex foreignname. Nevertheless, without this it is impossible to understand. In the terminal of your broker or on a third-party resource, each asset has its own periods of information display. Namely:
- 1 minute (M1).
- 5 minutes (M5).
- 15 minutes (M15).
- 1 hour (1H).
- 4 hours (4H).
- 1 day (1D).
Depending on your service provider, thesethe periods may be slightly different, but the most common and used to date have been given above. It is advisable to read about the relationship of these periods and understand that the younger form the older ones. So without this in any way.
This is the direction of prices. The price can be only two directions, namely the trend up and down. However, there are lateral movements. This is a kind of uncertainty when the price fluctuates and can not choose the direction. In addition, trends have kickbacks. This is when the price goes up, for example, but it can not do this continuously, and there is a slight decrease. This is normal, like market noise. The golden rule of trading is to trade only in accordance with the direction of the price.
This is already more complicated. Technical analysis for beginners is not an easy thing. And when it comes to various graphical indicators, it becomes even more difficult. The following are the most popular indicators:
- Index of relative strength (RSI).
- Stochastic oscillator.
- Bollinger waves.
Each of them has its own tasks, thereforeit is recommended to study each separately. Try to look for information about these indicators separately or use the help that brokers often offer in their platforms. These tools are often used in trading strategies, but there are countless of them in various combinations and variations.
If you decide to deal with the currencytrade, then read the literature and forums, study various candle patterns and other information. As you have already understood, the most important is the technical analysis for beginners. The book about one thing will not give the newcomer a general picture, so it's best to look for information on forums and in various schools.