top of page

Technical analysis: the science of predicting the future? 🧭🧠

Have you ever wondered how professional traders can sometimes predict price behavior so accurately? How do they know when to buy or sell an asset?


The recipe is to use historical price data to identify patterns and trends that can help us predict the future in many, many scenarios. And that five-star Michelin recipe results in a top-notch dish: technical analysis.


Buckle up trader, because we are going to break down technical analysis and how we can use it to improve your results.


What is technical analysis in trading?

Technical analysis is a methodology for analyzing financial markets based on the study of historical price behavior.


Its objective is to keep us informed of the past and present of prices, in order to make projections of the future with more probabilities of success, by identifying patterns that allow us to anticipate market movements.


How does technical analysis work?

Through the study of price charts, technical indicators (especially those powered by AI) and price action.


The study of price charts: A visual representation of the evolution of prices over time. It allows us to identify trends, patterns and other behaviors of interest.

The use of technical indicators: Technical indicators are tools that help us

identify patterns and trends in data. There are hundreds of different technical indicators, each with its own characteristics and properties. Today the power of AI allows us to take them to the next level.

Price action: The here and now of prices, right now. The study of price action allows us to identify trading opportunities in real time.


Recognized figures in technical analysis

We are talking about a discipline with a long history, and there are many recognized figures who have contributed to its development. Let's mention some of them:


Charles Dow: Dow is considered the father of technical analysis. In 1896, he founded the Dow Jones Industrial Average, the most important stock market index in the world. Dow developed the Dow Theory, which has rules that we still follow today.


Ralph Nelson Elliott: To him we owe the Elliott Wave Theory, a theory that describes the behavior of prices in cycles of 8 waves. He changed the course of the investment world in 1934.


William Gann: He developed a series of technical analysis techniques based on geometry and mathematics. Gann's techniques are very popular among high-frequency traders. His fame at the beginning of the 20th century was notorious to the point that he is said to have predicted the great crisis of 1929 a year in advance and achieved returns in excess of 1000% per month.

Recommendations for making the most of technical analysis


Learn the basics of technical analysis: There are many resources available, some free, to learn about technical analysis including books, our online course and webinars.

Use the right tools: Don't limit yourself to using just one technical analysis tool. Getting a complete view of the market is not complicated only if you are in the right place:


As a broker we recommend TradingView, which offers an intuitive interface and a large number of technical indicators especially those we have developed with AI. But there are also MetaTrader4 and Esignal.


Yes, we always say it but we repeat it: Patience and a hawk eye at all times. Technical analysis is not an exact science. Don't expect perfect results right away.

Stay connected with your community: The market moves every day and we always keep in touch about all the trends. Don't get left behind!


Conclusion

Technical analysis is not a magic wand that will make you money effortlessly. We are engaged in a risky business, and there is always the possibility of losing money.


It is important to manage our risk properly and not invest more money than we can afford to lose.


Ready to take your trading to the next level this week? Let's go for those results!





REFERENCES


For this article, prompts have been used to request information

interpreted and provided by AI (Google Bard). Written and edited

by Kevin David Terán and verified by Pedro Arizaleta and Erwin Sánchez

Comments


Smart Trading Indicators Support team

Our support team
is always there for you.

ISO Smart trading indicators AI Logo

© 2023 by Smart Trading Indicators. All rights reserved.

  • Telegram
  • Instagram
  • X
  • Youtube
  • Facebook
  • TikTok

Trading in financial markets is inherently risky, and a significant number of traders end up losing money. The contents and services provided by SMART TRADING INDICATORS LLC are designed for informational and educational purposes only. The material should be viewed as hypothetical and used primarily to demonstrate our product. It is not intended to serve as financial advice. Decisions regarding buying, selling, holding, or trading in securities, commodities, and other investments carry inherent risks. Such decisions should ideally be made based on the advice of qualified financial professionals. Remember, past performance is not indicative of future results.

​

Hypothetical or simulated performance results have certain intrinsic limitations. Unlike actual performance records, simulated results do not represent real trading. Additionally, since the trades have not actually been executed, the results may have under-or-over compensated for certain market factors, such as a lack of liquidity. Simulated trading programs are generally also developed with the benefit of hindsight. We make no claim that any account will or is likely to achieve profits or losses similar to those shown in our materials.

​

The testimonials presented on our website are individual experiences of clients who have used our services. They are not indicative of future performance or success and may not reflect the experience of all our clients.

 

As a provider of technical analysis tools and services for charting platforms, SMART TRADING INDICATORS LLC does not have access to personal trading accounts or brokerage statements of our customers. Consequently, we cannot confirm whether our customers fare better or worse than the general trading population based on our products.

​

Our charts are provided by TradingView, upon which our tools are built. TradingView® is a registered trademark of TradingView, Inc. (www.TradingView.com). TradingView® is not affiliated with SMART TRADING INDICATORS LLC.

​

This statement is a summary and does not represent our full Disclaimer. We strongly encourage you to read our full disclaimer for a comprehensive understanding of the risks involved in trading and the use of our products.

​

Our services may include tools and analytics powered by OpenAI technology. It's important to understand that while these tools use advanced AI algorithms, they do not guarantee trading success and should be used as part of a broader trading strategy.

​

Additionally, our community and services may be accessible through Telegram. Participation in our Telegram channels or groups should be viewed as a platform for sharing information and ideas. It does not constitute a recommendation for trading decisions.

​

Always approach trading with caution and consider seeking advice from financial professionals. Our goal is to provide tools and resources to aid in your trading decisions, not to replace diligent market research and professional advice.

bottom of page