Everyone knows that fund managers use fundamental analysis which includes financial analysis to select stocks in their mutual fund scheme. There are various parameters which goes into the science of selecting the right stocks. There is a team of research analysts who deep dive into the world of all kind of stocks to find the hidden gem among them, if that is a fact for all fund managers then how does technical analysis come into the picture?
We are sure that the fund managers do a excellent job in selecting the stocks, there is a reason to it and the reason is that they study the macro environment and take decision when the particular stock fits into their scheme of things
Technical Analysis is the art of reading charts, here price action speaks about the nature of the stock and everything else is secondary. There is a lot to learn from the charts if you are able to read it correctly. There are fund managers who lot at a chart to confirm their thinking before they go ahead with the stock selection.
We at Higherhighs Wealthmakers beleive in the popular gujarati saying “Bhagwan bhav che” which means Price is GOD. It would be foolish to assume that there is only price action when you talk about Technical Analysis, there is so much more that a chart can tell you. Remember there is nothing new under the sun and likewise the stock market has seen everything.
The stocks follow a pattern and behave in a particular way no matter what the market conditions are. They rarely go off the track and if it does then you can be almost be dead sure that there are other things in play. To a seasoned Technical Analyst he can capture the move but the same cannot be said for the poor retail investors who often fall for these kind of moves in the stock market
Indicators in Technical Analysis have been around for a long period of time… Right from MACD, RSI, Onbalance volume,Stochastic and many other each has found its exponents who can vouch for their accuracy and profitable trade in it.
Technical Analysis has often seen as a tool to take short term trades and are thought to be used by Intraday traders, Future & Options Traders and Scalpers. But it is time to look at Technical Analysis beyond this. Technical Analysis has the power to take correct action for any stocks for any time frame which can be a matter of few minutes to a few years or for very long term investing.
We will try to cover more on this in our future blogs.
Do let us know if you would love to read more blogs on Technical Analysis.
