January 21, 2022
  • January 21, 2022

6 technical analysis myths you shouldn’t believe

By on November 27, 2021 0

If you’ve heard of technical analysis, or TA, it’s easy to believe it’s not for you. There are so many myths going around that it does not work for most stock transactions and that it is not accurate. There are people who say that TA is actually the best thing to understand the market. what is the truth? Let’s find out by debunking some of the most popular TA myths.

  1. TA is only for short term or daily trading

This is the myth that you have probably heard the most often. Critics or TA say that it is only really suitable for computerized trading, like short term trading and day trading. Otherwise, it doesn’t have much value.

“You’ll be surprised to know that TA was used long before computers were invented,” says financial writer Kathleen Horner, of 1 Day 2 Write and Write My X. “Plus, some of the first people to use the computer ‘AT were long-term investors. and traders. For this reason, TA can be used on a long-term scale, not just for days and weeks.

  1. TA does not have a good success rate

Many traders are put off at the idea of ​​using TA because they think its success rate is low. However, this is something that is simply not true.

When you research the top performing traders in the market, you will find that they often use TA to follow the markets and decide how they can profit from them. This is one of the many tools that can be used to be successful on your own.

  1. TA is only for individual traders

Another common myth is that TA is only for individual traders. It is true that a lot of individual traders are successful in using TA, it is not just for them.

You will find that many hedge funds and investment banks also use TA quite often. Investment banks, in particular, now employ full teams, dedicated to using TA in their work. High frequency trading is also heavily dependent on TA, especially when it comes to high stock volumes.

  1. TA is quick and easy to do

    Michel Dehoyos

Take a look online and you will see people offering courses in the use of AT. They promise that it will be quick and easy, and that you will have instant success.

Like most things in life, it’s not that easy. You can certainly enter the world of trading using simple TA techniques, but you won’t progress any further until you do more research. “TA is more than you might think,” says James Bale, business writer at Brit Student and Next Coursework. “If you want to go further, you will have to do more research and learning, and that takes time.”

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  1. TA can provide accurate price predictions

One of the advantages of TA is that you can use it to predict prices, which allows you to get an idea of ​​the amount of a certain stock. When you start to review it, it’s easy to expect these price predictions to be right. For example, you can expect a certain stock to hit $ 60 in two months.

It is important to know that TA will give you a predictive range rather than an exact number. It can’t offer a guarantee because you don’t know what’s going to happen in the future. Instead, it will offer you the opportunity to study the probability of hitting a certain price. It doesn’t work all the time, but it is still a good tool to increase profits.

  1. Out-of-the-box TA software can help you earn money

This is a myth that sounds great, because who doesn’t want to make easy money? There are plenty of sites online that offer out-of-the-box TA software promising to make your job easier.

While this looks good, it won’t give you the results you want. They can’t do all the analysis for you, and they can’t guarantee profits.

There are so many myths around technical analysis floating around, and you need to be sure you have the facts. With this, you can be sure that you know what TA can and cannot do for you. In many cases, it is a powerful tool when used correctly.

Michael Dehoyos, writer and editor at Academic Brits.