What is Technical Analysis in the Stock Market?
Success in the stock market depends on a variety of factors; a pivotal one is having a well-rounded understanding of the things that truly matter. Within this framework lies two pillars of analysing stock and indeed, market performance. They are ‘Fundamental Analysis’ and ‘Technical Analysis.’
Fundamental Analysis is a puritan way of looking at the intrinsic value of a stock or index based on studying its underlying health i.e., looking at its revenues, profit margins, etc. On the other hand, Technical Analysis is a means of forecasting future price movements of stocks or indices by analysing past trading activity.
Technical Analysis constitutes formulating future price movements of stocks by analysing its past activity. The fundamental principal is that a stock’s past value has huge bearing on his current and future performance. Traders can utilise a set of high complex data points to carve out quantifiable conclusions that can be used to determine a myriad of things such as, price at which one should buy and sell stocks, the risk associated with the same and the expected returns among many other things.
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