Advantages and Disadvantages of Technical Analysis


Advantages and Disadvantages of Technical Analysis
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10/27/2022



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HappyBenefits of Technical Analysis


At this point, I want to point out The benefits of technical analysis. Which many people only have the idea that they want to know so that they can play stocks. Only to make a huge profit, which is true. Not only that. Because the correct benefits are as follows.

1. High flexibility in use. This means that it can be used in various financial markets. Not limited to the stock market only. That is to say, it can be used with both International Money Market, Interest Rates, Gold , Bitcoin, Forex, Crypto etc. Compared to Analysis in terms of fundamentals It may not be easy to apply the method of education in one market to another. In addition, technical analysis can also adjust itself to be used during different periods such as short-term or long-term, etc.

2. Shortening the scope and duration of the study. When there is a limitation or opportunity cost in terms of time. It can be seen that technical analysis It focuses on the net effect of the cause rather than the root cause itself. To delve into those causes. Which may not catch up on occasion. Because time never stops waiting for anyone.

3. Sometimes the price moves up It happened before fundamental analysts discovered the root cause. Because the market is more international (International) Of course, there are many reasons that affect the price movement. Although fundamental analysts will get to know the real cause of the price movement, but the price may be affected by other factors continuously. Which for money traders Or stock traders sometimes can't wait until the real cause is known. Because it may be at a disadvantage in competing with money traders or other stock traders

4. Technical analysis This shortens the analysis time. This allows us to analyze a larger number of markets, while fundamental analysts may be limited to specialists in a particular business group. Due to limited time constraints while the amount of data is large The result is technical analysis It can help us look at the price movements in various industries. Easier and faster It is easier to see the overall picture in a broader sense.

5. Let the timing of the market entry (stock) be a technical signal or not? To enter and trade stocks in the market Or there is no need to be in the market during this period.


Crying Some Disadvantages and Misconceptions about Technical Analysis


1. Although technical analysis can help to limit the scope and shorten the time of analysis. But considering Just the final outcome of the event It may cause the analysis to be insufficient. And may be a victim of stock manipulation, which in fact can be somewhat remedied by setting a stop in advance. And the heart must be strong enough to slash the tumor It's time for a problem Because during the market is very noticeable. Price movements that are going in an unexpected direction. Before, it was very serious. This means that the number of tumors that must be slashed increases as well.

2. Using Technical Analysis without realizing the concept behind the techniques can cause It can be quite dangerous, for example, using a trend following system in a moving market. Moving without direction without a trend (sideway) will only affect us in and out. Where profits may be almost nonexistent or have almost Not enough broker commission (Better passive) So if love is a technical analyst should be able to understand the concept of Tools that will be used for good first and combine them with the direction of market movement.

3. Some investors understand that Knowing the technical method, it can be purchased at the lowest price. And sold at the highest price which in the real world No other tool or technique in the world can do this. In fact technical tools Just tell me when to enter the market. And when should leave the market or at which point it is confirmed that the trend can fill has changed and before it can be confirmed that it is a real trend change We may have passed the lowest or highest point, but it can reduce the risk due to wrong entry and exit. However, technical analysis never confirms that you will get the highest profit.

In addition, the signals of technical analysis It doesn't always have to be right. There is no such tool that is 100% complete. Users of technical tools must be disciplined. In order to accept when analysis yields erroneous results And prepare for this kind of situation by setting a stop, that is, if at this point you will admit yourself to be wrong and decide to sell it. (or buy back, depending on the case)



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