Technical Analysis Software - Five Features That Make Trading simple and easier

In forex trading, there are several ways to analyze the movements of the market and its trending behavior. One of the major methods used in the market today is Technical Analysis. Generally, this type of analysis is the observation of the prices on the market and how their changes can affect or predict future movements. Technical analysis software are computer programs used to help analyze the raw data from the markets and present them to the user in a more understandable and organized form.

Basic Principles of Technical Analysis

The most important feature in analysis software is that it can follow the basic tenets of technical analysis. To better understand why the software provides the particular information, or how it comes up with the data, it is important to have a basic knowledge on how this type of analysis works and what are the basic principles behind it. First, this type of analysis focuses on price movements alone and not any of the other factors that have any effect on the market. Second, the system relies on patterns of price behavior considered by experts as significant in predicting future movements of the market. Finally, patterns can only be recognized because it is accepted that, in the market, history repeats itself, and many movements can be predicted by the analysis of similar patterns in the movement of prices. Stock trading software are great tools for technical analysis because of its capability to analyze great bulks of data and analyze them through complicated theories that would be nearly impossible to finish in a timely manner manually.

Technical Analysis Theory

Being able to choose on how raw market data is analyzed and presented is another important feature of the best stock trading software.

There are several categories of theories that are used as the basis of the results of technical analysis. Most results are based on Trends or moving average, Gaps, Waves, Number Theories like Fibonacci and Gann numbers, and Indicators like RSI, oscillators and the like. The ability of the software to detect the existence of these patterns on the data you are trying to analyze is paramount in ensuring that the user can make better decisions and ensure higher profit margins.

Presence of Major Tools

These are the major tools that should be present in good technical analysis software. Firs is the RSI or relative strength index which is a ratio of the movements made by the price of particular stock or currency. Other similar tools are the Stochastic Oscillator and the Moving Average Convergence Divergence. Another major tool groups are number theory applications like analysis through the Fibonacci numbers and Gann numbers system. Basic analysis like searching for Waves, Gaps, and Trends in stock or currency prices in a period of time should always be available in good technical analysis software.

View the original article here

Read More

Stock Options—How to Be Successful Using Technical Analysis

If you have joined any stock options seminar recently, you might have noticed the frequent mention of technical analysis. This term is also popular among trading blogs all over the Internet and for the right reason: you understand stock options and how to choose from among them through technical analysis.

The Difference Between Fundamental and Technical Analysis

So that we can understand how to pick the right options, we have to understand how to analyze it first. Without good analysis, it is as if, you are just throwing away your money. There are two main categories of analysis, namely, fundamental analysis and technical analysis.

Fundamental analysis

When you want to predict the future performance of great companies or its markets, you resort to fundamental analysis. In this case, you will be looking for fundamental data as loss and profit statements, earnings guidance and earnings growth and the like. The disadvantage of fundamental analysis is that even great companies experience downturn even for extended period of time and they don't always have great stocks.

Technical analysis

While you resort to fundamental analysis when you want to study the performance of a company, you resort to technical analysis when you want to study the exclusive performance of a stock. With technical analysis, you will deal with prices across different periods of time and volume transacted. Through this, you will know the performance of the stock regardless of the performance of the company and this will help you avoid those extended downturns that it experience.

Now why do you think that technical analysis is such a favorite among option traders? Well, you have  to remember, that fundamental analysis is favorable for long term investing while technical analysis is great for short term ones.

While stock traders can keep their stocks for like forever, options expire for a specific time period. In fact, options in most cases expire within a year and option traders often use strategies with short outlooks say, in weeks or months.

This is the primary reason why technical analysis is very important to stock options. Since they option traders don't have the luxury to hold their options for a long time, they need a way to study its performance at a very short period. In addition, as an option trader, you don't earn dividends similar to your stock trading counterparts. The only way for you to make money in option trading is when the outlook plays out within the period of expiration of your option.

This makes fundamental analysis unimportant to you as an option trader. Besides, you also make money when the when the stocks drop so all the more, identifying performing companies through the use of fundamental analysis becomes relatively unimportant to you.

I hope this explains why you need to understand technical analysis when you want to successfully choose stock options. For more information on this subject, don't hesitate to visit What If Options where you can find more trading tips and other relevant information.

View the original article here

Read More