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Technical Analysis 101
Penny stocks are high-risk high-reward investments & trading them can make you serious money if you can minimize losses. One great way to minimize losses is by learning & using technical analysis to plan and execute trades.
Which is why in this article you will learn the basics of technical analysis & how you can start using it today, along with proper due diligence.
What is technical analysis?
Technical analysis is a method of forecasting the direction of prices through the study of past market data usually in a graphical chart format. In simple terms it is a way to use “technical indicators” to find predictable price patterns for a particular stock.
How to get started with technical analysis?
Getting started with technical analysis is easy. All you need to start technical analysis is reliable charting software, a stock ticker to investigate, and a sound understanding of the technical indicator & chart type that you wish to use.
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There are several chart types to choose from. The 3 most popular chart types are line charts, candle stick charts, and bar charts. There are also several technical indicators to choose from as well.
Technical indicators are any class of metrics whose value is derived from generic price activity in a stock or asset. Technical indicators are usually used as “over-lays” on top of a particular stock chart so you can easily see them.
An Example of a technical indicator is the RSI or Relative Strength Index. The RSI lets us know if a stock is considered “oversold” or “overbought” based purely on it’s price history and not it’s fundamental value.
A score of 50 is considered stable, 30 or lower is considered oversold, and 70 or higher is considered over bought. The RSI indicator is usually found directly on top of a chart.
Where to find technical analysis software?
Software for technical analysis is offered by most online brokerages such as Etrade or TD Ameritrade. If you don’t have access to technical analysis software through your brokerage http://stockcharts.com is a great place to go to for quick online analysis.
Stockcharts.com allows you to pick a chart type & choose from more then 30 different indicators to use on any given stock ticker including penny stocks.
Technical analysis is extremely useful for traders, and can help you make serious money from penny stocks by minimizing your losses, and maximizing your gains.
By mastering a few technical indicators you can come up with a winning strategy & a winning trading plan.
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