The Golden Rules of Technical Analysis (Part 2) “The 4 Misconceptions of Using Technical Analysis” -

The Golden Rules of Technical Analysis (Part 2)“The 4 Misconceptions of Using Technical Analysis”

The more you can grasp the principles of technical analysis, the more successful you can be in both real market trading and our trading simulator. Let’s explore 4 misconceptions.

1. Technical graphs are 100% accurate

The essence of technical analysis is using statistics or past price data calculated with various tools or indicators to predict future price trends based on probabilities. However, using graphs does not guarantee 100% accuracy. The investment market may have uncontrollable factors that deviate from predicted trends, causing prices to behave differently than anticipated. Therefore, technical graphs are not 100% accurate.

2. Technical graphs cannot predict future price movements

Although technical tools can indicate the current trend as an uptrend, downtrend, or sideways movement, they cannot predict the exact future direction of prices. Traders must manage risk and allocate portfolio assets to accommodate unexpected situations that deviate from their predictions.

3. The more analysis tools, the better

This is not always the case because different technical analysis tools have various formats and methods of application depending on market conditions, asset types, and individual trading styles. Using all available tools together may lead to confusion. The best approach is to know how to select and use analysis tools that are suitable for your own trading strategy.

4. The best technical analysis tools exist

Some traders may seek out secret formulas or the best technical analysis tools to consistently generate profits. In reality, there is no specific technical analysis tool or secret formula that guarantees profits. Investment markets are volatile and rapidly changing. Strategies or secrets that worked in the past may not work in the future. Traders need to adapt and constantly seek new trading approaches instead of relying solely on past successes.

These are the four common misconceptions that many traders have. With the correct understanding of technical analysis, one can navigate the investment market successfully over the long term. If you are still not ready, you can practice trading in our trading simulator. Stay tuned for the next lesson.

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