How to Master the Skills of Technical Analysis – Introduction
Technical analysis is one of the best analysis tools for day traders. We use this type of analysis to identify potential positions to enter or leave a trade. Other types of analysis that are equally important are sentimental analysis and fundamental analysis. However, most people are usually scared of technical analysis and everything it entails. In this article, I will look at the best ways of mastering the skills of technical analysis.
- Take it easy
Most people are usually scared of starting day trading because of the perceived complexities of doing the technical analysis. This should not be the case. The reality is that technical analysis is not a very complicated field. It is also a reality that you can learn this type of analysis within a short period of time. Therefore, if you are interested in technical analysis, you should first take it easy.
- Find the resources
You should then take time to find the best resources for learning technical analysis. Luckily for you, there are hundreds of places you can find these materials. In the internet, there are hundreds of videos, websites, and resources that you can use to find these materials. In my journey to learn technical analysis, I found several resources that were very important.
First, there were books. I recommend that you take time to read books like Day trading and Swing Trading, and The Little Book on Currency Trading by Kathy Lien. I also recommend books by Alexander Elder who is a highly respected person in the trading field.
Second, there were YouTube videos. Videos played a very important role in my technical analysis journey. There are hundreds – if not thousands – of YouTube videos. These videos focus on different elements of technical analysis. I recommend that you take time to watch YouTube videos as this will help you master the skills.
- Identify the key indicators
There are hundreds of technical indicators. These indicators are based on different theories. As a trader, you don’t need to understand all of the technical indicators. In fact, you will be just fine by understanding and using five indicators. For example, I have over five years’ experience as a trader but I only understand about 7 indicators. As you start, I recommend that you understand the moving averages, the relative strength index, the parabolic SAR, and stochastics.
This is probably the most important thing that you will do as you learn the skills of technical analysis. Different types of assets require different types of analysis for different types of trading. For example, if you are a day trader, you will need to approach this type of analysis in a different way than if you are a swing trader. The key to success in this is to spend a lot of time practicing and finding the right way to use the indicators. In all this, you should use a demo or practice account.
- Trade and evaluate yourself
Finally, after spending a good amount of time practicing, you should now move to trade using your real money. This is a very important step for you. As I have said in the past, the best way to learn how to trade is when you have real money at stake. This makes you feel the pain of losing the money. You should be conservative in the amount of money you risk in all this. Remember that you are not an expert yet.