What is Technical Analysis In The Stock Market?

Technical analysis in the financial market is a trading discipline. It is a method to forecast price direction through the study of market data, price, and volume. It is an approach that makes buying and selling decisions using statistics. It involves the study of trade charts history and statistics to analyse assets.

What is the Meaning of Technical Analysis?

What is the technical analysis of stocks? It is the most common question asked by several newbies to share the market. It is the study of price, volume charts, and other technical indicators. The mathematical study facilitates trading decision-making. Technical analysis is an attempt to determine future price movements. It means to examine and predict securities’ future price movement. The idea is based on if a technical analyst can identify past market patterns, they can fairly form accurate predictions of future trajectories.

stock market technical analysis 23 June 2010

It is one of the major techniques of stock market analysis, the other being fundamental analysis. Where fundamental analysis focuses on measuring securities ‘intrinsic value’. While NSE technical analysis online course is purely based on asset chart patterns. Unlike fundamental analysis observes countless elements that attract asset price. Such a balance sheet, revenue, income, and debt.

How does stock market technical analysis work?

To explain how technical analysis works, let’s begin with an example.

Imagine you want to buy a car in your city. Where everything including the car engine type, gears, technology, and model is new to you. One fine day, you start to ask around for a good car and they tell you to invest which is a valuable option. And then you give it a try.

Surprisingly, many vendors are selling a different option for a car. Everything looks fascinating and tempting to buy. You are now, clueless as to which car to buy.

The first option is to find the best car a visiting to the most appropriate car dealers. Then take a test drive from the top few models. During a test drive, check out the car’s performance and resistance in long run. You repeat this exercise across a few dealers. After that, you are more likely to end up buying a car that satisfies you.

The advantage of the technical analysis technique is, you know what exactly you are looking for. Since you have researched by yourself. However, on the other side, this method is scalable. Because you have limited time at your disposal you could have missed you to take a test drive. Thus, there is a high probability that you could miss the best-selling car.

Alternatively, you will ask friends for references or try finding popular ones among others. Once you find such a car, you make a simple assumption. What if a car can make a profitable sale which means it is the best car available in the market? Based on your assumption you invest your money to buy a particular car.

The benefit of this approach is variability. You just need to survey people with the maximum suggestions for a specific car. And bet on the fact that the car you buy is the best. However, on the other side, people can not be always right.

If you recognize, this option is similar to fundamental analysis. When you research a few brands thoroughly. We discussed fundamental analysis in the previous post.

While the first option is very similar where one scans for opportunities based on market trends and preferences. Technical analysis is an approach to research trading opportunities based on market actions. The market participants visualize the means of a chart. Over a certain period, these stock charts form patterns, displaying messages. Here when the role of the technical analyst comes into action to identify chart patterns and develop a reference.

Just like any evaluation method, technical analysis helps with the decision-making process on several assumptions. As a technical analyst, you need to trade in the market, keeping it in perspective.

Pros of stock market technical analysis

For any trading strategy determining a signal for price trends in the market is a key component. Every trader should apply a working method to locate profitable entry and exit market points. Besides, using technical analysis approach to predict a future price.

Many people make self-independent trading rules using the technique. As more and more traders use the technical indicators to locate support and resistance levels, there will be a higher number of conversions congregated around the same selling point. Thus, the price pattern will be inevitably vicious.

Technical Analysis of Stocks

Cons of stock market technical analysis

There are a few elements every trader should keep in their mind. Few factors like market behaviour which is unpredictable. There is no guarantee that any form of evaluation, technical or fundamental will give you 100% profits. However, past price patterns give insight into price trajectory with a guarantee of profits.

Therefore, traders should facilitate several indicators and analysis tools. This practice will help to reach the highest level of success. Besides risk management strategy to identify, assess and prioritize actions.

How to Learn Technical Analysis

A prudent trader would educate themselves with the techniques. To determine investment opportunities and profitable trades. Technical analysis is a quick way to deal with stock market losses. Losing hard-earned money in the stock market can happen to anyone. It is more than a painful experience. The best way to deal with losses is to recognize your failure. And begin with gaining knowledgeable insight. 

The best course of action is to invest in learning stock market technical analysis. Technical analysis is a sure-shot way to increase profitable trade. Join the IFMC Institute Technical Analysis Course in Delhi.

IFMC Institute

IFMC Institute is governed by representatives who act as an IFMCians. We strive to build a culture of continuous learning and industry interactions. IFMC enables stock market professionals to expand their knowledge, stay tuned with emerging knowledge, and upgrade skills to climb a career in stock market. We are committed to producing Stock Market Analyst, Technical Analyst, NSE, BSE, NCFM, and NISM certification, Equity Analyst, Research Analyst and other financial market professionals for this upcoming sector.


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  • Duration : - 6 Month
  • Language : - Hindi or English   
  • Certification : - Yes 
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