Forex Charting Lesson: Chapter 1 – Introduction
We made our Technical Analysis lessons as simple as possible for easy understanding. There will be as much graphs and step by step guide as possible. We believe that the basic is the most important step to understanding TA – with these basics, you can move on to read some of the more advanced books in the market. But what we can say is that – you do not need to. With the basics + your own experience = You can develop your own set of proven tools. Lets start with Chapter One.
Technical Analysis an Art or Science?
It started more as an art and has became more scientific due to rapid development in computer technologies.
It will remain an art with greater scientific underpinning.
Technical Analysis (TA) Vs Fundamental Analysis (FA)
FA = Gives the causes of price movement
TA = Studies the effects of price movement
TA and FA are mutually supportive in the long-term but when it comes to short-term theres usually conflicts.
FA tends to be economic in nature and will not be able to forecast non-economic events such as political and other crises which often move financial markets.
Guidelines in using Technical Analysis
– TA is based on evidence, not logical.
– TA is based on probabilities and same as HYIP investment – theres no gurantee.
– Do not have the ONE tool mentality. TA is able using a combination of the tools available.
– When a tool/technique is proven to be successful, try to use it more often and improve it.