Technology has given investors not only the chance to trade online, but also the tools they need to analyse stocks like the pros.
In fact, over the past few years, technical analysis has become more popular than ever. Traders look at how prices have changed in the past to try to predict how prices will change in the future.
Fundamental analysis is another way to evaluate stocks. It looks at a stock's true value and requires a deeper understanding of how an industry works and how a company is run.
But how do investors look at the data, and what are the benefits of technical analysis?
Like many other brokers, RushTrade lets their traders use candlestick charts as a tool for technical analysis. Candlestick charts have been used for a long time. They are based on a Japanese version that was used to look at the price of rice contracts.
The daily candlestick line, like a bar chart, shows the market's open, high, low, and close for a single day. However, it also uses colour and shading to show the range between the day's open and close.
The relationship between the prices at the beginning and the prices at the end is a big difference between the common bar charts and the Japanese candlestick charts. Bar charts pay more attention to how today's closing price changed from yesterday's closing price. Candlestick chartists are more interested in how the last price of the day compares to the first price of the day.
The methods of technical analysis are based on the idea that the market is more emotional than it is logical. So, candle patterns are basically the actions of traders in the market at a certain time. Candlestick chart analysis works because people tend to react to events as a group.
