The Technical Trader

Technical traders

Technical traders are people who rely on market statistics to determine which way a stock is going to move. Their trades are based on price charts and indicators, as technical traders believe that stocks trade in a predictable pattern.

The stock's price charts are coupled with other indicators like moving averages and Bollinger Bands to help predict which direction a stock is going to move. Technical traders rely heavily on support and resistance levels, areas where the stock will experience heavy buying or selling pressure, to help them determine a possible deal.

Many of the better trades unearth by technical traders comes through identification of a pattern in the stock's price chart. Many patterns like the head and shoulders or double tops are easy to ready, as are flags and pennants. These are crucial to being able to understand technical analysis.

Technical traders also rely heavily on indicators, created as a ratio of price and volume. Moving averages (both exponential and simple) and Bollinger Bands are useful when it comes time to determine a directional stock's next move. They indicate when selling or buying pressure is likely to appear, thus helping the trader determine whether a bullish or bearish trade is at hand.

Most technical analysts prefer to look at the chats with candlesticks, which provide instant feedback as far as how the stock traded the previous day. A big white candlestick is extremely bullish, while a big black candlestick is equally bearish. The ability to recognize such facts could be vitally important to the potential trader.

Technical trading will also gauge price trends. The technicians use the numbers to predict the attitude of buyers and sellers and how that might affect the price of the stock.