What it is
Technical analysis is a method for predicting the future price of a security by looking at market behavior and price trends in the past.
While it is commonly used for stock market trading, this method can be applied to anything that can be traded and has historical price data. Such securities include currencies and some fixed-income assets.
What it means for you
Technical analysis is often used by traders or people who frequently buy and sell securities. They rely on the assumption that trading activity and prices move in patterns that can repeat themselves.
They attempt to identify these patterns and make forecasts using many different indicators like charts and statistical trends.
This method differs from fundamental analysis, which seeks to measure the “real” value of a company by looking at factors that may affect its performance over time, like financial health and economic conditions.
One method isn’t necessarily better than the other. When choosing between them, you need to know which one suits your overall strategy and the type of investor you are.
Keep in mind, however, that proper technical analysis may require comparatively more in-depth knowledge.
