Equities and foreign exchange markets might not be entirely predictable, but many investors believe there are patterns and trends that can be analyzed and used to make profitable trades. As this YouTube page here shows, this type of trading does not need to be as complicated or mysterious as it might seem, either.
Known as “technical” trading, a term that differentiates it from the fundamentals-based investing that so many are already familiar with, this approach includes many different strategies and tactics. As the videos in question make clear, however, even just learning about some of the basic principles that underlie them can be helpful.
Trends, Resistance, and Breaking Through
Anyone who has ever studied a stock or foreign exchange price movement chart will have seen that things tend to develop along lines that, at least in hindsight, form fairly clear trends. Far from being a purely random walk where the chance of moving up or down is equal at each and every step, the average stock’s price voyage moves first for some time in one direction before reversing its course and doing the same in the other.
Investors call these spurts of momentum trends, and they study them with an eye toward using future ones to make profitable trades. Simply coming on board early enough in the course of a trend can enable a trader to sell at a profit, but there are even more involved and advanced concepts that can be helpful, as well.
One of these is the notion of resistance. Where a stock might move up and down over the course of a day, it will also often remain above and below particular price levels in the process. These points of resistance are thought by some to exert a kind of corrective influence on a stock’s price and can be interesting to study, as well.
Technical Trading is a Favorite Approach Among the Most Active Investors
What all these approaches to investing share is a need to be tuned in fairly closely to what a stock or foreign exchange pair is doing at all times. As a result, this style of trading tends to be most appealing among investors who are ready to put in hours each day studying price movements and trying to profit from them.