Advantages and Disadvantages of Technical Analysis

[Brian Connor]

Hello, I would like to know the advantages and disadvantages that come with Technical Analysis.

[Rishabh Tyagi]

Advantages

- It help us understand the price momentum of the stock to help us anticipate the price trend.

- Charts say it all. Insiders or smart money can play all sorts of manipulation in the news or books, but price always tells the real story. 

A spaceship crashed in the early days of us space missions. It took approximately three months to determine that a component manufactured by a specific company was responsible for the accident. Interestingly, the stock price of the manufacturer began to decline shortly after the crash, months before the investigation results were released.

Disadvantages

- It is not easy. You have to invest time, and energy in front of screen reading charts, making sense of observations, creating a strategy, and testing it. 

- It can sometimes be emotionally challenging. 

- For investing long-term, it is not the best method to help analyze the stock. But when combined with fundamental analysis it can help make better decisions. 

 

To learn more about 'Technical Analysis' you can check out these small but precise Articles; https://www.asktraders.com/learn-to-trade/technical-analysis/ 

 

 

[Kian Hughes]

Hello, thanks for asking! 

The advantages of technical analysis are that market news reflects the stock prices, it is easier to keep track of the trend of an asset using technical analysis. This type of analysis used previous experiences and gathered knowledge to signal a trade opportunity, and when to make a timely exit in order to maximize your profits.
 
Sometimes technical analysis can bring confusion, by sending out mixed signals, whether to buy or sell, it also isn’t 100% accurate, and doesn’t guarantee profits. Another disadvantage is that it carries a biased opinion, and because of previous misconceptions and bad results, it can oversee good opportunities.

The best combination is to combine fundamental and technical analysis, which will guarantee the best results.
 

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