If you are eager to derive the maximum benefits from your cooperation with the EXANTE brokerage company, you are bound to master technical analysis.
Technical analysis is a set of instruments for predicting changes in the value of the asset based on previous fluctuations in its value. Technical analysis is actively used on the stock market.
A professional trader conducts technical analysis of each asset of his investment portfolio and the market as a whole, analyzing their correlation.
Technical analysis has the following crucial elements:
· Support and resistance lines: The first is a straight line drawn through the minimum cost points, while the second is represented by a line drawn through the maximum cost points. The lines enable you to forecast the change in the asset’s value within the current trend. If the price chart goes beyond them, then this indicates a trend change.
· Patterns: Fluctuations in value when plotted on a chart often form simple and complex geometric patterns (triangles, rectangles, trapezoids, etc.). The figures also allow you to predict the movement of value. They are true for both short-term and long-term charts.
· Indicators: These are lines displayed along with the price chart and may or may not coincide with it. In fact, the indicator line is the result of calculating a certain parameter (for example, it may be an average cost or trading volume), which can be compared with the current price chart and a certain correlation can be derived. There are several types of ready-made indicators available on any trading platform. A trader can also create his own indicator.
· Statistical analysis: It includes monitoring the trading volume, a quote window, spreads and other data on a specific asset and their further use to predict the value.
In general, technical analysis is used for short-term forecasts. Since its accuracy depends on already accumulated market data, its efficiency for certain assets is quite questionable. The matter is that some assets depend on many non-economic factors, which, against the background of relatively small volumes, makes it poorly predictable.
For example, your technical analysis shows an increase in the value of a certain asset for the coming month, but suddenly a legislative body of one country issues a directive to ban this asset and its cost dives. Therefore, technical analysis should be backed by fundamental, which takes into account economic, political, psychological as well as other causes of changes in value.
Avoid these mistakes
If you want to succeed in trading with EXANTE founded by Alexey Kirienko, you’d better follow these tips.
Don’t invest in securities everything you have
Avoid investing your last money in stock trading. First, put aside enough money to withstand unforeseen expenses. Only if you have extra money, you can try your hand at stock trading.
Do not act at random
If you decide to trade on the stock exchange on your own, be sure to undergo training. Most brokers conduct courses for novice investors. Trading programs often have a demo mode. So, you can try your hand at it without the risk of losing your real money. You can try demo trading provided by the EXANTE broker.
Don’t be guided by emotions
By acting impulsively, many mistakes can be made. A novice investor should not react sharply to the slightest price movement on the stock exchange. On the contrary, you need to act decisively only if the price changes significantly. Set the limit of losses that you are ready to bear. For example, if the asset has fallen in price by 20%, you need to sell, fixing your losses. In other words, you should be ready to put up with the loss of 20% and close your trading position in order to avoid even greater losses. You will be exposed to a strong temptation to continue but resist it.
Do not put all your eggs in one basket
You’d better buy securities of companies from different industries. For example, when oil prices fall, the securities of all companies in the oil and gas sector suffer. If you purchase securities of companies from various sectors of the economy, for example, the chemical industry, engineering, telecommunications, this will help you to reduce the risk of losing the invested money. Thus, you will diversify your risks.
Do not believe promises to earn 500% per day
Only scams guarantee anything in the stock market. On the contrary, a responsible broker such as EXANTE founded by Anatoly Knyazev will warn you about the risks. The situation on the exchange is volatile, so it’s up to you to be responsible for the decisions made.