Advantages and Disadvantages of Technical Analysis

Advantages and Disadvantages of Technical Analysis

Forex trading is indeed an activity to get the maximum profit. But it must be understood that forex trading activities are not done blindly. It’s not enough to rely on luck. Traders must have the ability to analyze price movements before then making a transaction. In addition, it is important to use an official Indonesian forex company broker that is already registered with a financial institution in Indonesia. Currently there are many online forex companies in Indonesia. Choose after you first know the track record.

In the world of forex trading, at least two models of analysis are used, namely fundamental analysis and technical analysis. Well this time what we will explain is to know the advantages and disadvantages of technical analysis.

Before furthermore, the method of technical analysis is a method to analyze past data from the market namely price, volume and open interest data to predict future price trends. The data is then presented in the form of charting or charts.

Also Read : Risks and Advantages of Forex Trading

One of the striking differences between technical analysis and fundamental analysis is that technical analysis departs from the thought that price movements in the past can describe current price movements. Why is that done? Because this analysis uses mathematics including statistics and cahos theory. The results obtained are usually in the form of exact and definite numbers.

Technical analysis forex trading has advantages including;

  1. Focus on price
    Your goal in analyzing is to predict future price movements, so it is important to focus on price movements both in the past and prices in the present. So you are not bothered with news or information circulating.
  2. Entry Point and Exit Point
    One of the advantages of technical analysis is that you do not waste time on ineffective transactions because technical analysis can determine the right time for transactions (entry points) and time friends to exit the market (exit point) clearly.
  3. Easy
    One of the advantages of technical analysis is that it is not complicated so it is relatively easy. This is because as a trader you have spoiled the existence of history data on the chart. One can easily read what is going on with the market. The smallest opportunity is an opportunity for traders to make transactions.

Technical analysis has its drawbacks.

  1. The data is too late
    Technical analysis generally uses previous data that then gives rise to indicators. So when the data from the indicator says the price is up, actually the price itself has gone up.
  2. Less objective
    Different interpretations between each trader are very likely to occur because every data displayed on the technical analysis chart allows this to happen.
  3. Price levels vary
    Technical analysis is known to have support and resistance levels, which are critical levels that can be a titi to reject the price back in direction. The reality at this level is always changing, sometimes higher or lower. This makes many traders deceived.
  4. It takes a lot of supporting data.
    The data used to support the accurate predictions is much so it takes time to get it.
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