eli5 how does technical analysis work in trading? and why is it not just astrology?
In: Economics
It’s incredibly too complex to explain like you’re five without a basic understanding of each individual indicator, but technical analysis is just looking at how the stock is currently performing based on the known trading information. There is a bit of psychology associated with trading, you’ll often see patterns that may be helpful in predicting future movement of the stock but it’s like noticing that *70% of the time under these conditions the stock moves in this expected way* similar to how meteorologists try to predict the chance of rain. It will not be right all the time. While a diligent trader can scoop out some big wins at times, almost nobody can beat the market in any meaningful way in the long-term.
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