Technical Analysis and Japanese Candlesticks

Utilizing technical analysis is an important component of wise investing in various securities and can be done to any kind of security, including mutual funds, stocks, bonds, etc. When using technical analysis tools on a specific security, you are looking for price patterns, price fluctuations, and trends. Your ultimate objective is to figure out how you stand as an investor. In other words, should you sell or buy?

So, how is stock market technical analysis accomplished? There are several different methods. Some investors use technical indicators as part of their technical analysis process and others do their technical analysis by studying charts of a security’s past activity. The best investment advice regarding technical analysis is to use several different methods – comparing one against the other in a system of checks and balances.

There are several assumptions made when using the best technical analysis tools. A first assumption is that the past is a good indicator of the present. However, when dealing with the stock market, coming to this conclusion during technical analysis does not always lead you to profitable results. The other assumption is that all securities have a tendency to form stock chart patterns in their fluctuations. This is fine, and is often the case, but the market is often unstable because of stock volatility.

How then do you make use of the most important technical analysis tools? Why try it if they are not completely accurate? Well, even though they are not 100% accurate, you still stand a reasonable chance of analyzing correctly, depending on how thoroughly you were in your analysis using the methods you have chosen.

Therefore, fundamental and technical analysis methods offer a way to make educated choices when making new investments in securities and determining how to handle your current investments. So you can at least have confidence in knowing you did your absolute best, even though it isn’t a sure thing.

So who will do the technical analysis? Well, you can either hire people to perform the technical analysis or you can do it yourself. If you work with a company that helps manage your long term investing accounts, it’s a safe bet that they employ human resources to help analyze the market and gather data. Then they pass this information to their clients in an attempt to guide them in their investment options.

If you choose to do it yourself, using technical analysis with candlesticks, it could take a while to get the hang of it. Science and math are used to do the analysis, but many consider it an art. Although you can use formulas to give you a set of numbers, it is an “art” for that person to determine what the numbers actually mean.

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