Technical analysis of stock trading

Technical analysis is an important aspect of stock trading by which one can easily understand the direction of stock i.e upward or downward. Technical analysis is a tool mainly used by traders as compared to investors. Determining exact entry and exit in any stock is quit tough, but with the help of technical analysis one can easily discover exact entry and exist point in a stock in which traders or investors want to do trading or want to make investment.

Technical analysis had come up as an effective tool for many traders and investors for doing stock trading. Many technical analyses believe in price charts formation for conducting stock trading. With the support of price chart technical analysis determines the direction of stock, they can determine the exact bounce-back position of stock if the stock goes downward, and they can determine the exact reversal of stock if the stock moves upward. There are also various factors which fall under the technical analysis standpoint such as volume of the stock, moving average of price, overall sector performance, % of stock holding by big financial institution, mutual funds, per day, per week, per month, per year stock performance, etc. Technical analysis more believes in the same stock trends rather than undefined trends. If there is no clear trend pattern technical analysis loves to stop their stock trading or likes to remain out of market until a clear trend is form no matter how the overall market pan out i.e. move upward or downward.

More than investor, trader basically finds technical studies useful while doing stock trading. Fundamental analysis and technical analysis goes hand-in-hand. If there is significant fundamental change in any particular stock, an immediate impact is seen in stock performance and with the help of technical studies one can get a clear trend about the same stock. If at any point fundamentally stock is showing poor performance at that point technical analysis looks from fundamental point of view to a stock and makes his technical decision how big that particular stock will fall down further and same vice versa if the stock is fundamentally making good performance.