“To be in the top 20 or 30 for volume, your account should be at least $20K.”
What is the difference between technical analysis and technical indicators?
I’ll explain below.
Technical analysis measures a price movement that is not indicative of fundamental value. It is more akin to market psychology than to fundamentals. By no means does technical analysis measure the fundamental value of a stock or fund. Technical analysis uses a combination of signal and noise to gauge movement in the price.
For example, say you buy 100 shares in XYZ stock at $20. That same stock will perform better on trading days than during a normal day because of the signals in front of you.
The main factor that will determine the effectiveness of these signals and the price action of an asset is market sentiment.
For example, a fund which is not performing well in the stock market will perform poorly due to the signals created from the top 20 or 30 stocks in the market on a given trading day.
Technical indicators, on the other hand, focus on the fundamental values of individual security’s or mutual funds. They provide a guide for what those values are that can make or break an asset, regardless of whether prices are rising or falling.
For example, if an investor buys stock at $20 because they believe in a tech company and believes the stocks below them are also buying low and will be at top of the price as the tech company performs better, the technical indicator would indicate they are buying into the technical pattern.
This is the essence of technical analysis.
The key concept in technical analysis is that prices and trends are caused by signals, and that signals are created by markets and financial systems. Thus, the underlying fundamentals drive price and momentum.
What are the different types of technical indicators and how do they work?
Technical indicators serve as the cornerstone of technical analysis for any investor who’s trading in equity stocks and mutual funds. As stated above, technical indicators also serve as the foundation of fundamentals theory.
Technical measures can include indicators which are based on price momentum, such as moving averages.
In addition, stocks and funds usually also include an equal-weighting or moving-spread indicator (or similar concept).
These measures will include the level and number of candles associated to the price action to determine whether that specific percentage of price is moving in one direction or another.
This concept is used to analyze trends in the price; the movement
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