Dependency on technical analysis while buying stocks

Today we can learn the basics to understand the market movement. How does it take place and how do people predict that movement based on the technical and fundamental analysis. However, we will discuss here further about basics and few important topics to help people understand the market.

We all must agree to the fact that when someone is gaining in the market due to fluctuations then definitely there is someone who is losing his money. This is just because the supply and demand of the shares in the market and market is highly volatile hence it never ends and this is how the price is set for the tradable instruments. This price is recorded by experts and analyst to understand the future movement. Professional traders and researchers do believe that the Nifty call or the price movement is not random, they do follow previous trends. But it is much more difficult to get that trend which might be followed in the future for the direction of the price. Technical analyst concentrates on the price they do not care about the fundamentals because they think that the fundamental developments are followed by price movements. They follow the trends from previous years but when the price moves out of the trend it tells that supply or demand has got the rise. If price moves above the upper band then demand is rising and if price moves below the lower band then supply is rising.

By this I would prefer saying that the fundamental analysis is used to decide which stock or share we can buy and the technical analysis let us know at what time we have to buy it to get the returns. If we buy the share of a company which has traded flat since past few years that market will have a different opinion for that stock and buying or selling of these stocks will not benefit and if the stock has shown a great jump in the share price then people should wait for its pullback.

Every time on a technical support you cannot be dependable because two experts can have different opinions on the same trend if one expert is more interested in the bullish market he can give his advise towards a bullish market and if the expert is towards bearish, his view towards the trend will be more bearish. Even both of them can have two different scenarios and patterns with logical supports and reasoning. Also sometimes trend shown is very late and till then risk-reward ratio decreases which cause fewer returns.

The technical analyst is always useful to make you out of that trade or to square off your position when he sees you moving towards the wrong side of the trade but few people can be stubborn and they are not willing to move out and it could turn to be the worst mistake. Trade can move against you beyond your imaginations and then we need a technical analyst to open your eyes and show you the trend and calls. Investing in the Nifty call from researchers at a low price is not a big deal but when a person losses a huge amount in trading and stays there with the hope of recovering the money can be a big deal for him