Wednesday, December 29, 2010

Technical Analysis

Technical Analysis refers to the study of patterns and trends in prices, without any regard to fundamental factors such as earnings, book values etc. Also referred to as charting; there are many variations and theories within the technical analysis school of thought, e.g. point and figure charts, candle stick charts, patterns such as head and shoulders, pendents, lines of support and resistance, etc. Essentially the trading decisions are based solely on price data. The next evolution of technical analysis is quantitative and algorithmic trading, which applies advanced statistical analysis and computer programming to large sets of market data to detect price anomalies, momentum patterns, arbitrage opportunities, and various other trading strategies. Technical analysis has been dismissed by most academics given the conclusions based on the Efficient Market Theory.

Synonyms: Market analysis, Charting, Momentum trading, Price driven trading

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