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Tagged: Pros/cons of technical analysis
What are the pro / cons of technical analysis?
Pros of Technical Analysis
1) Data required are easily available and reliable.
2) Easily understood with some basic knowledge.
3) It gives a idea of entry and exit price.
Cons
1) It cannot effectively be used for the long term investment
2) It requires years of experience to exactly determine the right movement of the market.
Technical analysis is to study the market, market will reflects the situation first and no other data available for retail to perform fundamental analysis. Since it is based on demand and supply, it can be identified using Price and volume which is transparent to everyone.
In technical analysis can only be follow the market trend. Which means, technical analysis will not help to sell at the top or buy at the bottom to get the maximum profit.
technical analysis gives us a study based on demand and supply which makes it more reliable and easy to ascertain the entry and exit points which also minimises the losses.
However the person who is doing technical analysis is required to be an expert on the same
Pros:
Technical analysis is relatively easy to do as compared to Fundamental analysis.
Data for doing this analysis is readily available for anyone.
Cons:
Since it focuses only on the demand, supply & price movements, it is not completely reliable as compared to Fundamental analysis.
It cannot be used for long term investments.
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