Does technical analysis work? This is hotly debated topic and there is no lack of those that take opposing views Technical analysis is the study of historical data and charts to determine future price movement. Those that support technical analysis hold the view that, price discounts everything, price movements are not totally random and what is more important that why. A chartist uses many different tools and a type of charts with candlestick charts the most pervasive. Deciding trends and price levels is done with use of indicators such as MACD, stochastic, moving averages and others. Technical analysis is used Forex as well all other markets. The charts are use to reveal supply and demand at different price levels in diverse time frames. The one that is used is reliant on the time frame being traded by th trader.
Those that take the opposing view believe that there is no means to predict price moves with any degree of confidence and prices move randomly They brand technical analysis a "voodoo science" and laugh at the fact it does not nicely fit a scientific model. Their view is that historical results can't predict were prices will be in the future No matter what those that contest technical analysis say, the vast number of traders use it to make their trading judgements It is widely accepted by traders and will not expected change. Expert advisers are programmed with technical indicators and that is what they use to generate their signals
In fact a whole industry has been spawned from the study of charts and those who study them are technical analyst.This industry is huge and produces, books, DVD’s, technical analysis services, software and many other items to traders who are looking for the elixir to make them profitable. New products are continually being introduced and there is no lack of demand for them
Does technical analysis work? The answer would have to be affirmative, not since technical analysis is an precise science or it has magic predictive powers. It functions because so many think it does and use its indicators. When you have a large group of traders looking at the same data and getting the same conclusions, you will get a predictable result. It’s a self-fulfilling prophecy. That is why if you trade any market you need to use it and not get into the intellectual argument of whether it works or not. It's difficult to take sides, they both have valid arguments, but in the end technical analysis needs to be on of your trading tools
Author Resource:
I have been writing article about the Auto Forex Trader and Forex trading for many years. If you would like to see some additional articles and information, check out our website at Fx Trading Tips
![[Valid RSS feed]](http://www.look4articles.com/images/icon_Rss.png "XML Feed For RSS"){kind=icon}
Category Rss Feed
Print This Article
Add To Favorites
![[Valid RSS feed]](http://www.look4articles.com/images/rss.jpg "XML Feed For RSS")