Financial Terms / technical analysis

Technical Analysis Explained

Technical analysis is an effective form of trading that evaluates investments to help make the best decisions.


Price Movement = (Current Price - Previous Price) x 100 / Previous Price

How do I calculate the technical analysis?

It is important to understand how to calculate technical analysis in order to effectively trade stocks and other financial instruments. Technical analysis involves identifying important price patterns and trading signals in order to determine the best time to execute a buy or sell order. A good way to calculate technical analysis is by using an equation such as the one below: 

 Price Movement = (Current Price - Previous Price) x 100 / Previous Price

This equation can be used to calculate the percentage change of a security’s price from one time period to the next. Sourcetable can also be used to calculate technical analysis. By familiarizing yourself with both the equation and the available software, you will be in a better position to make informed investment decisions.

What is Technical Analysis?

Technical analysis is a method of evaluating securities by analyzing statistics generated by market activity, such as past prices and volume. It uses charts and other tools to identify patterns that can suggest future activity.

How Does Technical Analysis Work?

Technical analysis works on the premise that all current market information is already reflected in the price of securities, and that studying price movements or trends can help predict future price direction. It uses various methods and tools to analyze the data, looking for patterns and trends that could suggest what a stock will do in the future.

What are the Different Types of Technical Analysis?

There are several types of technical analysis, including chart patterns analysis, trend analysis, momentum analysis, and volume analysis. These methods can involve the use of various tools and indicators, such as moving averages, trendlines, and oscillators.

How Do I Use Technical Analysis?

Technical analysis is used by traders and investors to help make informed decisions about when to buy and sell securities. By identifying patterns and trends in price data, technical analysis can provide potential indications about future price movements. However, it's important to remember that technical analysis is not a guarantee of future results and should be used in conjunction with other forms of analysis.

What is the Difference Between Technical Analysis and Fundamental Analysis?

While technical analysis focuses on the study of price movements, fundamental analysis looks at economic and financial factors to determine a security's intrinsic value. Technical analysis is more concerned with trends and patterns in trading behavior, while fundamental analysis looks at factors like company earnings, economic indicators, and industry conditions.

Key Points

How do I calculate technical analysis?
Price Movement = (Current Price - Previous Price) x 100 / Previous Price
Technical Analysis is a Form of Trading
Technical Analysis is a form of trading that involves evaluating investments and predicting price movements of tradable instruments. It can be used alone or in combination with other research methods to create trading systems.
Forecasting Price Movements
Technical analysis is used to forecast price movements of virtually any tradable instrument. It uses past price data to predict future trends and movements and helps traders to identify entry and exit points.
Evaluate Investments
Technical analysis can be used to evaluate investments, track price movements and identify potential trading opportunities. It can help traders understand how the market works and identify potential areas of risk and reward.
Trading Systems
Technical analysis is used to determine trading systems. It uses various indicators and chart patterns to determine the best time to enter and exit a position. It can also be used to identify potential areas of support and resistance.

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