Technical Analysis For Trading Discover Technical Analysis At CAPEX

CAPEX offers traders the opportunity to learn the fundamentals of technical analysis for trading at the CAPEX academy. Technical analysis is a trading discipline that helps evaluate investments and identify opportunities to trade based on price and pattern trends determined through using charts. Essentially, traders will be entirely focused on studying the price and volume of a particular instrument. Thankfully, CAPEX offers plenty of tools to deeply analyse every tradable instrument.

How do traders use technical analysis?

Typically, traders using technical analysis identify short-term trading signals that help evaluate the strength or weakness of an instrument relative to the market. Traders can easily gain an improved estimation of their valuation of an instrument. Technical analysis is applicable to any financial instrument that has historical trading data, such as the CFD stocks, commodities, forex and cryptocurrencies at CAPEX.

However, since technical analysis is generally a short-term analytical tool, this technique is heavily utilised by forex, commodity, and cryptocurrency CAPEX traders. There are tons of charts that CAPEX traders can use to forecast future price movement based on indicators derived from historical price data.

Most typically, technical analysts using CAPEX trading platforms will be looking for the following type of indicators:

• Chart Patterns
• Price Trends
• Support Levels
• Resistance Levels
• Moving Averages
• Oscillators
• Volume/Momentum Indicators

There are, however, hundreds of different patterns and trading signals that traders at CAPEX can use to support their technical analysis research. You’ll even find common trading systems that aim to help forecast price movements. Most retail investors will be focusing on market trends. This can include support and resistance trading using candlesticks or it might simply be an analysis of a trend’s strength. At CAPEX, there are so many charts and indicators available to conduct technical analysis for trading, alongside trading courses to learn how to use them effectively.

The approach

When it comes to performing technical analysis at CAPEX, there are two schools of thought: the top-down approach and the bottom-up. If you haven’t already checked out the CAPEX academy, you’ll hear about these approaches quite often.

Traders looking for short-term gains tend to use a top-down approach. This approach involves a macroeconomic analysis of the overall economy, before moving on to individual markets and securities. For example, a trader looking to invest in short term-gains on the stock market would be interested in a 50- day moving average chart – available in all CAPEX trading platforms – to see any breakout stocks that could signal a buying opportunity.

Now the bottom-up approach is purely focused on an individual asset. If we were talking about the stock market, a trader would analyse a single stock that showed fundamental opportunities to buy and sell. For example, stock traders would love for undervalued stocks that are currently in a downtrend and then use the technical analysis tools available at CAPEX to determine when the price will bottom out.

Don’t worry. We’re not just going to throw all this information at you and not teach you how to use it. Performing technical analysis at CAPEX is fairly intuitive and you’ll have plenty of tools and educational resources to help you along the way. Here are the 4 steps to get you started.

Choose a strategy

While you may want to trade a particular instrument or asset, you’ll need to identify whether it is worth trading in the first place. You can’t trade bitcoin or Apple stocks just because you like them – they need to be a viable option for making a profit. This means you’ll need to pick a trading strategy and stick with it. CAPEX offers plenty of tools to allow traders to complete any number of different trading strategies that suit their needs.

This doesn’t mean you have to simply choose a single candlestick pattern and look for it for 8 hours a day – learn about a few patterns that signal bullish reversals and look to trade assets that are moving up.

Pick a strategy that suits your needs. A day trader will probably prefer basic trendlines and indicators of volume, while position traders will most likely prefer more complex chart patterns and various indicators.

Identify an instrument

Employ your strategy on a few choice instruments. If you have chosen a short strategy – say, a 15 or 50-day moving average – you’ll be looking at highly liquid and volatile markets such as cryptocurrencies or certain stocks. Deploy your charts provided by CAPEX and attempt to uncover a pattern that indicates price movement in the fashion that you would like. When your technical analysis produces a signal, feel free to open a position in accordance with your strategy and imposed limitations. Don’t forget you can use stop-loss and profit target orders to control your losses and profit potential.

Track and monitor your trades

Once you have opened a position, you can’t just sit back and relax – unless of course you have opened a trade that you don’t expect to see results for a very long period of time. Day traders will want to closely track and monitor their trades. You can learn from this by watching how the market moves – does it match the sentiment identified by the chart you used? Will the trend continue? CAPEX provides plenty of tools for maintaining a watchful eye over your trades and there are different tools for different types of trades.

Use the full CAPEX suite

CAPEX offers a wide range of trading tools that traders can use to track and monitor their trades. You can even use specialised tools for performing technical analysis or have the analysis performed for you. CAPEX offers daily analyst ratings that offer trading recommendations and education on new trading strategies. Gain insights into market sentiments before you perform your technical analysis with CAPEX news sentiment – that way, you’ll know where to look that day.

Trading with CAPEX.com

The great thing about CFD trading online is that you can do it anywhere there is a secure internet connection. Inevitably, this means that mobile trading has proven particularly popular as traders can conveniently open and close positions from their mobile or tablet as and when it suits them.

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Nothing in the trading world is guaranteed. Any strategy or technique to trading will have a mixture of benefits and disadvantages, but trading is about learning to leverage those advantages effectively. Technical analysis is far from perfect, but it is one of the most effective ways to trade at CAPEX. It’s a good idea to learn the pros and cons of trading using technical analysis.

Pros

One of the biggest advantages of technical analysis for trading is that people are predictable. That means you don’t need extensive financial experience to understand technical analysis charts as it is generally followed when large amounts of traders will buy or sell an asset. Advantageously, new traders won’t need to understand the financial health of an instrument, rather they need to predict behaviour – a much easier feat.

Technical analysis is also a much better way to identify when to buy or sell too. This technique can really improve your timing and is significantly better than fundamental analysis at identifying timing. The big advantage here is being able to identify the price movement before it happens, thus providing CAPEX traders with the perfect window of opportunity.

Cons

There are some arguable limitations of technical analysis. Firstly, there is nothing to say that history will repeat itself. While history has proven to be a good indicator of future price movements – otherwise the strategy would not exist – it is far from a foregone conclusion. Price movements can be affected by many things and the historical data may mean nothing in some cases.

Some experts have argued that technical analysis only works because it constitutes some form of self-fulfilling prophecy. What we mean by that is if historically a large number of traders have a stop-loss order at a certain point, that action will simply repeat itself thereby fulfilling the anticipated drop in valuation. Traders will simply see this looped price drop and most likely sell their positions – the cycle never ends. Essentially, if enough traders follow the same signal, they will create the price movement that the signal is indicating.

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