How to Learn the Technical Analysis

The Technical analysis identifies the best trading opportunities. It earns profit with rules-based entry/exit, discipline, and consistency to make money with calculated risk from the stock market. Technical analysis also involves studying behavioral economics and, importantly, analyzing and managing the risk involved in the trading, also called "Risk Management."  

The majority of the people coming to share or stock market usually enter the market with intentions of growing rich overnight. They depend on various sources for their investment/trading decision. Generally, rumors, whats-up messages, So-called Stock Market informers, Television, Newspapers, Websites, Tips providers, and other wide range of information!.

The problem with these sources is that not all the calls/investable ideas are suitable. As our initial capital, taking the risk, the time frame, or the stock market knowledge is different. Hence may potentially lose most or all trading capital!

This article explains the best way to learn technical analysis for beginners without risking money in the stock market.

Key Points

  • Technical analysis is the study of price and volume with charts, indicators, patterns, etc. 
  • Equally important to understand what returns (profit) for what risk (loss).
  • Somewhat experienced traders can learn technical analysis from online resources, books, and videos.
  • Beginners need to watch out for many online/offline trading courses that promise huge profits in reality, making them lose money in the stock market. 
  • Beginners must first practice "paper trading" [simulated live market] before investing actual money.
  • Beginners need to start with small capital with small quantities of trade for at least 50 trades and gradually increase the money to trade full potential.

Step 1: Building Strong Technical Analysis Foundation

Step 1: Learning and understanding technical analysis's core concepts, assumptions, strengths, and weaknesses are most important! Learning the technical analysis from an excellent professional trader and trainer is highly recommended. A professional trader/trainer will helps understand the idea in a simple, effective, step-by-step manner. An experienced trainer also has a practical way that suits the student's risk appetite, understanding level, time available for trade, and student psyche. A professional trader/trainer will also give info/clues to make a better decision. At the same time, trading additionally provides a charting solution and scanner/screener (tools that identify the stock based on rules defined) for a quick and effective profitable trade.

Alternatively, one can learn technical analysis by reading books, researching websites of Stock Brokers, Educational institutes, etc. most of them are usually free. Several trainers, seminars, and workshops on technical analysis typically charge a hefty fee!

The beginners need to be extra careful with many online trading courses claiming unbelievable returns coupled with extraordinary claims! High decibel advertising/marketing, fake bonus & deep discount tactics! Instead, focus on slow and study the technical analysis!

The beginners are cautioned not to believe some software & tips providers that claim high return/accuracy! If the system works very well, why do they sell the systems! Instead, focus on learning time-tested basic principles, core concepts, trading edge, and money management for learning and earning in the stock market on a long-term basis.

Finally, some websites provide an overview of technical analysis concepts for free such as can offer a good starting point for new learners.

Step 2: Practice, Practice, Practice, and Evolve Your Trading Skills!

To become a "successful independent trader," Step 1 can contribute to 40% of the successes; Step 2 can donate the remaining 60%. Beginners learn the stock market in this step.

After learning, trading instruments, basic concepts of charts, trends, indicators, patterns, Support & resistance, types of trade, Index & weightage, trading strategies/edge/ methods, money management, market dynamics, traders' mindset, etc., applying these theories into practice, paper trading and continuously observing the market movement.

At this stage, beginners are encouraged to do stimulated trading or paper trading. Identify the trading opportunities learned in the class/study and practice on the paper without investing the money.

Example: Buying 100 shares when a positive crossover of moving average (one trading method). Say around at Rs 300/- and sell when the exit signal given by the system says at Rs 305/- making Rs 5/- paper profit. We also observe when this strategy works, when not, what time frame we are trading, and what risk and return. Knowing the strength and limitations of the crossover method will help us to adapt to the trading method. We are fine-tuning the system which works for us. All this we do by not putting actual money, instead of paper trade. Continuously practicing this way, we will be ready for real trading. Any shortcomings/mistakes that we make as traders can be improved to be successful traders. 

The beginners highly recommended following this step. For many newcomers trading with excitement and anxiety, paper trading helps to reduce and build a calm mindset. Remember to be a good trader making good trading practices called "trader's mind" is the most important thing to be a trader.

Beginners can learn good trading habits without investing money in the stock market. It helps beginners to shift from paper trading to a simulated trading platform. Many trading simulated platforms available in the market are provided either by brokerage firms, software companies, and web-based solutions. Once you become well versed with all systems and the strength and weaknesses of a trader, only one can trade in the actual market.

Bottom Line

The best method to learn technical analysis is knowing and understanding the core concepts and money management and applying the technical analysis teaching into practice in paper trading. The theoretical and practical knowledge is essential as the market is volatile, react to different news flows, etc. Beginners need to use many trading platforms and virtual trading platforms to learn the stock market. Practice and fine-tune your methods according to your ability to take the risk, return, time availability, and psyche.


Get Free Updates