Benefits of using Technical Analysis 

Using technical analysis can be a great way to make money in the stock market. There are a number of reasons for this.

1. Technical Analysis allows you to keep your losses short and let your winners run. A good majority of trading is all about cutting your losses short, without capitol you can’t make any money. Technical Analysis allows you to enter trades where you risk very little if you are wrong and make out big if you are right.

2. Technical analysis is founded on price movement. Supply and demand is the force behind the stock market making it move up or down. If a stock has great Fundamentals, but no one wants to buy the stock it is not going to head up. Using price patterns is the most accurate way to determine how fear and greed are affecting the markets.

3. Technical Analysis allows you to make short term trades. That allows you to take advantage of compound interest. Someone who can consistently make 5% a month will far outperform someone who can consistently make 20% a year.

4. I can’t compete using Fundamental Analysis. Fundamental Analysis can be a great way to make money in the stock market but it is hard for the average person to compete. This is especially true when you consider big corporations with billions to invest in. They can afford to spend big money to figure out the fundamentals. It is impossible for the average investor to know as much as they do so why compete with them.

5. Technical Analysis allows you to find the big corporations. If a stock is in an uptrend with high volume it is safe to say someone with big money is investing in that company. Someone who most is investing billions into the company feels confident to put their money there so why not take advantage of that and trade that stock with them.