What You Need To Know About The Forex Market
This lesson will cover the following
- Social Trading and Technical Analysis
- What is Technical Analysis?
- Can you trade without using it
If youve read our guide so far, then youve definitely met the term “technical analysis”. If you want to learn more about technical analysis in detail, we have a specialized guide for that on our site. In this section, we will explain some of the basic concepts, as well as why its important to know it.
What is Technical Analysis?
Simply put, technical analysis is the process of analyzing data in order to make predictions about the future movements of an assets price. Technical analysis is based on the premise that past movements may show hints about future movements. In many ways technical analysis is rather useful, but you need to know what youre doing in order to utilize it. You need to be able to read charts, spot patterns, see levels of support and resistance and move on from there.
Why Do You Need Technical Analysis?
Social trading is a relatively new type of trading and helps you make financial decisions based on what other people think. However, this hasnt always been the case. Before that, the use of fundamental and technical was needed in order to anticipate market movements. Even now, in the midst of social trading platforms, there are traders dedicating hours of their time every day in order to make the predictions youre using.
If youre a relatively new trader, you might be thinking, “Why would I need technical analysis? I am already copying traders.” As weve said in the previous section, you dont really need it if you want to trade like this. You can still count on getting signals from traders you deem trustworthy. You can copy traders and have no idea why theyre doing what theyre doing. Its OK. You can still invest. You can have a people-based portfolio. You can still make money.
However, if you want to be a real trader, you need to know much more than just the user-base of your social trading platform. You need fundamental or technical analysis (both, if you want the best results, but we are talking about a lot of data in that case), you need to know the market and you have to constantly improve, read and research. You will have to adapt your style, evaluate trades, make contingencies and more. Its a lot of effort but its what it takes to be a real trader.
Can You Trade Without Technical Analysis?
Well, of course you can trade without technical analysis. The whole premise behind social trading is to give investment opportunities to people who know little or nothing about analysis, investments, the market and more. You can either use this system to utilize others and trust in their abilities, count on their success and hope for the best; or you can actually use social trading as a way to learn a lot more, a lot faster.
You dont need technical analysis. But knowing how to perform it can be so helpful. Evaluating another trader is so much easier when you actually know a thing or two about decision-making. If youre not sure what is going on in the market, then you will simply have to trust what others think, and they can be wrong. Technical analysis will help you make better decisions. It will be another way of verifying that taking a certain course of action is worth it or not. At the end of the day, it cant heart you to be informed. It can only improve your chances. You just need to be certain enough in your abilities, but not be full of yourself. If you think that youre right every time, then you might make some wrong moves you wouldnt have otherwise made. This would be the product of your own arrogance, and arrogance here is not beneficial.
However, if you see that a trader who has proven himself is taking a certain action, and you share his views after examining the data, then this significantly improves your chances. In one way or another, its worth to take the time and learn technical analysis if youre serious about trading. If you dont want to learn and hope to make money off of others efforts, then you should focus on the social aspects more – evaluating traders, finding good investors and more (although technical analysis can help you with that, too).
Learning technical analysis will take time and there can be some downsides to it, but ultimately the pros significantly outweigh the cons. Just take a few minutes and at least look at our guide here. See what we have to offer. See what you can learn and how long it will take. Dont be hasty. Take your time. If you still dont think it s worth it, dont learn it. But we would definitely recommend learning it. Even if you would prefer copy trading, knowing technical analysis will help you become a more serious trader. Knowing something new cant be a bad thing, can it? Give it a shot and you wont regret it.