Technical Analysis
A technique used to forecast the movement of stock prices based on past market data is called technical analysis. Though some have claimed positive results simply considering the variables of price and volume, academic mathematicians scrutinize this as an incomplete analysis of market trends and statistics.
Over the past years, technical analysts have argued that a company's specific data affects the price and value of their stocks, therefore making fundamental analysis unnecessary. The method of fundamental analysis utilizes a comprehensive company profile to predict future trends.
The objective of technical analysis is to increase an investoras profit by predicting future market trends instead of guessing. Using similar data in a different way, fundamental analysis creates the same result. The goal of technical analysis is to provide a simple mathematic gauge to help make investment decisions easier.
One of the typical graph patterns used by professional technical analysts to make trading decisions is the, aHead and Shoulders.a Two similar-sized peaks with a higher center peak are graphic indicators. These patterns may not be mathematically valid, argue some critics, but the result of the psychological predisposition of humans to form patterns in a random geographical area.
While Technical Analysis seeks to use a purely quantitative measure for predicting market trends, it is limited by a number of factors: Technical analysts traditional ignore a lot of quantitative data. Analysts tend to adhere to particular paradigms, which favor different charting methods and attribute more or less weight to particular statistical patterns as market indicators, which reveals a subjective bias on the part of the Analyst.
The promise of artificial intelligence and machine learning will impact the future of both technical analysis and fundamental analysis. This technology will automate the decision-making process of investing without the limitation of how much data can be physically processed by an individual.
Computers do not identify false patterns and are able to identify miniscule data that does not appear to relate to the trend being analyzed. Though analysts typically search for larger, more significant trends, computers can identify trends of any size.
It seems many current analytical paradigms will become less important as tools improve. Though it is unknown whether machines will replace technical analysis, it is certain that they will reveal the shortcomings of our prior techniques and help us improve them.
Over the past years, technical analysts have argued that a company's specific data affects the price and value of their stocks, therefore making fundamental analysis unnecessary. The method of fundamental analysis utilizes a comprehensive company profile to predict future trends.
The objective of technical analysis is to increase an investoras profit by predicting future market trends instead of guessing. Using similar data in a different way, fundamental analysis creates the same result. The goal of technical analysis is to provide a simple mathematic gauge to help make investment decisions easier.
One of the typical graph patterns used by professional technical analysts to make trading decisions is the, aHead and Shoulders.a Two similar-sized peaks with a higher center peak are graphic indicators. These patterns may not be mathematically valid, argue some critics, but the result of the psychological predisposition of humans to form patterns in a random geographical area.
While Technical Analysis seeks to use a purely quantitative measure for predicting market trends, it is limited by a number of factors: Technical analysts traditional ignore a lot of quantitative data. Analysts tend to adhere to particular paradigms, which favor different charting methods and attribute more or less weight to particular statistical patterns as market indicators, which reveals a subjective bias on the part of the Analyst.
The promise of artificial intelligence and machine learning will impact the future of both technical analysis and fundamental analysis. This technology will automate the decision-making process of investing without the limitation of how much data can be physically processed by an individual.
Computers do not identify false patterns and are able to identify miniscule data that does not appear to relate to the trend being analyzed. Though analysts typically search for larger, more significant trends, computers can identify trends of any size.
It seems many current analytical paradigms will become less important as tools improve. Though it is unknown whether machines will replace technical analysis, it is certain that they will reveal the shortcomings of our prior techniques and help us improve them.
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