Less risk is better when it comes to investing.

How To Apply Technical Analysis In Trading

How To Apply Technical Analysis In Trading

When it comes to investing/trading, the long term prices are usually driven by the fundamentals of the underlying assets whilst the short term prices are often determined by the noises, and temporary supply and demand in the market.

Therefore technical analysis can be useful to decipher the short term direction of the market. There are so many different types of graphs available when it comes to technical analysis. In my opinion, I believe all of them work during certain types of market scenarios and none of them work 100% of times. It is more important to stick with one type of technical analysis which you are comfortable and familiar with instead of keep switching and chasing the holy grail (which works all the time). At the same time, acknowledge the fact that your technical analysis may provide the wrong signals from time to time. When this happens, you have to fall back on your risk management system to minimize the downside risk (which is another discussion topic for a different time).

Having said all these, my favorite technical analysis tool is Japanese Candle Sticks. I find it is easy to use and it gets more rights than wrongs in my experience. I picked up the candle sticks method mainly from trials and errors. However, there are some more structured learning sources available online.

Below are the links to some comprehensive and free ebooks on candle stick trading strategies.

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