Technical Analysis or charting has long been treated with a certain degree of scepticism among investors and has even been likened to share price fortune telling. But there’s a lot more to technical analysis than you might think.
Sometimes it’s difficult to agree that markets are not random but move in trends and that past price data can be used to forecast future price direction – these are fundamental assumptions of technical analysis.
Introduction to Technical Analysis
John Murphy , the author of Technical Analysis of the Financial Markets book which is considered the ‘bible’ of technical analysis, argues that saying historical charts do not work, would mean that an electrocardiogram is not helpful in determining a patient’s heart condition, because it only shows the curves of the past heart beats. However cardiologists would not agree with that as all those blips make a lot sense for them, but for some people it might appear as random noise. The historical data charts may appear random for those unfamiliar with technical analysis, but once you have taken time to study the rules of market behaviour, chart patterns and technical indicators, the randomness disappear.
Selecting stocks with technical analysis
To help our customers with their charting skills we’re committed to providing technical analysis educational resources, research and tools that give you more confidence when making investment decisions.
While only a small percentage of private investors use technical analysis, many professionals like asset managers, hedge funds and banks already employ it as their primary tool of analysis. We believe that an investor who does not take into account technical analysis might be at a disadvantage and is really missing a great way to further enhance their performance.
One thing that is certain is that a fusion of technical analysis (share price charts & indicators), fundamental analysis (economic and financial analysis) and behavioural analysis (sticking to what you know works and learning from your mistakes) will make you a better, more confident investor.
Technical analysis tools – buy and sell signals identified for you
We’ve partnered with Recognia, the worldwide leader in quantitative analysis, to provide you with two technical analysis research tools.
Recognia uses computer algorithms that automatically analyses the price action of several thousand UK and US shares at once to identify and interpret classic chart patterns and other key technical events – complete with short-term and long-term share price projections which you can use to find new trading opportunities, validate trades or monitor stocks in your portfolio.
Daily Trading Ideas
If you’d like to see a short selection of new Technical Events and potential trading opportunities every day then Trading Ideas might be right for you.
Daily trading ideas are available on our website along with expert commentary, highlighting four bullish and four bearish shares, suggesting either a rising price or a falling price dependent on the market.
Technical Insight
To build on the success of our Daily Trading Ideas service, we launched Technical Insight which is an interactive technical analysis tool.
Technical Insight lets you set your own customised filters (market, asset type, sector or technical and fundamental research preferences) to identify any active technical chart patterns on UK or US stocks, including any in your portfolio.
Technical Insight is free to our customers and integrated into our online share trading platform.
Find out more about Technical Insight
Technical Analysis ‘How To’ Guides
See how we can help you choose your next investment
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