Trading - Fundamentals of Technical Analysis from edX

In order to apply technical analysis with confidence, it is important to understand the theory of technical analysis, why it’s a rational approach to market analysis and how this discipline relates to fundamental analysis and investor psychology.

To build that confidence, we begin with an explanation of how technical analysts view the market in terms of supply and demand. We detail how the analyst develops information about the relative strength of the bulls and the bears through price charts and other tools.

Price charts are one of the primary tools of technicians. Charts provide a history of market action and analysts can observe patterns in the chart. As early as the 1930s, analysts determined that certain patterns tended to precede certain price moves. This course reviews those patterns, discusses how to identify the patterns and supplements this with concepts form behavioral finance to explain why the patterns are predictive. Different chart types are presented and important charting concepts are explained from a practical perspective.

In addition to charts, technical analysts also use indicators and various theories to forecast the direction of prices through the study of past market data.

We focus on defining and applying momentum indicators to make buy and sell decisions. Instead of simply explaining and illustrating popular indicators like moving averages, RSI, MACD and stochastics, we review historical back tested results of each indicator so that you can objectively evaluate their performance.

Indicators based on the sentiment of various groups are analyzed and breadth indicators are explained.

In addition to indicators, theories applicable to trading are studied.

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What's inside

Learning objectives

Apply technical analysis as an important component of security analysis, especially when combined with fundamental analysis
Understand how chart patterns reflect the principles of behavioral finance
Apply specific technical strategies to the investment selection process

Develop trading strategies based on technical theories
Evaluate indicators and patterns based on quantitative analysis

Apply technical analysis as an important component of security analysis, especially when combined with fundamental analysis
Understand how chart patterns reflect the principles of behavioral finance
Apply specific technical strategies to the investment selection process
Develop trading strategies based on technical theories
Evaluate indicators and patterns based on quantitative analysis

Syllabus

Mod01 - Background and Basics (Audit this module for Free)

Mod02 - Why Technical Analysis Works (Audit this module for Free)

Mod03 - Constructing and Interpreting Charts (Audit this module for Free)

Mod04 - Chart Patterns

Mod05 - Introduction to Technical Indicators

Mod06 - Testing Technical Indicators

Mod07 - Relative Strength

Mod08 - Technical Theories

Mod09 - Psychology of Trading

Good to know

Know what's good

, what to watch for

, and possible dealbreakers

Proper foundation for novice learners entering technical analysis

Uses clear examples to clarify technical trading patterns

Recommended for those with background in fundamental security analysis who are interested in combining it with technical analysis

Suitable for learners with little to no knowledge of technical theories

Utilizes charts to explain market movements and behavioral finance

Activities

Be better prepared before your course. Deepen your understanding during and after it. Supplement your coursework and achieve mastery of the topics covered in Trading - Fundamentals of Technical Analysis with these activities:

Technical Analysis Explained

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Delving into this comprehensive guide will provide a strong foundation in technical analysis, enhancing your understanding of the principles and strategies discussed in the course.

View Introduction to Technical Analysis on Amazon

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Read through the chapters systematically.
Take notes on key concepts and techniques.
Refer to the book as a reference for specific topics.

Follow Along with Technical Analysis Tutorials

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Exploring tutorials and resources will broaden your knowledge and provide additional perspectives on technical analysis, enriching your understanding.

Browse courses on Technical Analysis

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Identify reputable sources for technical analysis tutorials.
Watch video tutorials or read articles on specific technical analysis techniques.
Practice applying the techniques on sample charts.
Seek clarification and ask questions in online forums or discussion groups.

Construct a Visual Representation of Stock Indicators in Different Chart Types

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Create various charts to practice identifying and analyzing technical indicators, reinforcing your understanding of their patterns and applications.

Browse courses on Chart Types

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Select different stock indicators to analyze, such as moving averages, Bollinger Bands, and MACD.
Choose a range of chart types, including line charts, bar charts, and candlestick charts.
Plot the stock indicators on each chart type and observe the visual representation.
Compare and contrast the patterns and trends observed across different chart types.
Analyze the effectiveness of each indicator in different market conditions.

Four other activities

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Daily Chart Pattern Recognition Exercises

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Regular practice in identifying chart patterns will enhance your ability to recognize them quickly and accurately, improving your technical analysis skills.

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Review different chart patterns and their characteristics.
Collect historical charts of various stocks.
Practice identifying chart patterns on these charts daily.

Host a Technical Analysis Study Group

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Engaging in peer discussions will broaden your perspectives, challenge your understanding, and foster a deeper comprehension of technical analysis.

Browse courses on Technical Analysis

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Gather a group of peers with similar interests.
Choose a specific topic or area of technical analysis to focus on.
Facilitate discussions, share insights, and ask questions.
Summarize key takeaways and action points.

Develop a Technical Analysis Trading Strategy

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Creating a trading strategy based on technical analysis will enhance your ability to make informed decisions and implement your knowledge practically.

Browse courses on Technical Analysis

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Identify your trading objectives and risk tolerance.
Research and select appropriate technical indicators.
Determine entry and exit points based on technical analysis.
Backtest your strategy using historical data.
Refine and optimize your strategy based on the results.

Assist in a Technical Analysis Research Project

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Participating in a research project will provide practical experience in applying technical analysis, contributing to your understanding and enhancing your skills.

Browse courses on Technical Analysis

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Identify research projects or organizations seeking volunteers.
Apply your technical analysis knowledge to assist in data collection and analysis.
Collaborate with researchers to interpret results and draw conclusions.

Career center

Learners who complete Trading - Fundamentals of Technical Analysis will develop knowledge and skills that may be useful to these careers:

Trader

Traders buy and sell financial assets for a living. In this role, you'll use indicators and patterns to make decisions about when to execute trades. You'll use the theories you learn in this course to maximize the probability of making a profitable trade and build a strategy to implement those trades.

See salaries and explore the career path for Trader

Quantitative Analyst

Earnings forecasts, risk management, and pricing models are cornerstones of this role. These rely on studying patterns to build projections. As a Quantitative Analyst, you'll take the price charting and indicator analysis you learn in this course and turn them into mathematical models that will help your organization make important financial decisions.

See salaries and explore the career path for Quantitative Analyst

Hedge Fund Manager

Hedge Fund Managers make investment decisions for clients. To generate superior returns, these individuals rely on detailed analysis of potential investments. This course will help you develop foundational technical analysis skills which can be used to make your investment decisions.

See salaries and explore the career path for Hedge Fund Manager

Financial Analyst

This role involves making financial recommendations to clients. To do this, Financial Analysts use technical analysis to determine the potential for growth in a company's stock. The theories and patterns you learn in this course will help you make more informed recommendations.

See salaries and explore the career path for Financial Analyst

Portfolio Manager

Individuals in this role make investment decisions for clients. To be successful, Portfolio Managers need to understand how to evaluate the potential of an investment opportunity. This course will help you develop the technical analysis skills needed for this evaluation.

See salaries and explore the career path for Portfolio Manager

Risk Analyst

Risk Analysts use any number of tools to measure financial risk. Once quantified, they need to determine how to mitigate that risk. As a Risk Analyst, you'll use technical analysis to evaluate the potential impact of a given level of risk.

See salaries and explore the career path for Risk Analyst

Market Research Analyst

Market Research Analysts typically specialize in an industry or sector. This requires a detailed understanding of the competitive landscape. The indicators, patterns, and theories that you'll learn in this course will provide you with the insights you need to qualify new markets, understand your competition, and make recommendations to senior leadership.

See salaries and explore the career path for Market Research Analyst

Data Analyst

Data Analysts use a wide variety of tools to extract actionable insights from data. In this role, you'll use technical analysis indicators to identify patterns that would not be immediately obvious from a cursory review of the data. This course will teach you how to apply technical analysis to interpret research data.

See salaries and explore the career path for Data Analyst

Investment Banker

Investment Bankers help clients raise capital. To advise clients effectively, Investment Bankers need a strong understanding of financial markets. This course will teach you how to use the data in financial charts to develop a deep understanding of market sentiment.

See salaries and explore the career path for Investment Banker

Financial Planner

Financial Planners guide clients through important financial decisions. Many of these decisions relate to investing for retirement. This course will teach you how to use technical analysis to evaluate investment opportunities and build optimal portfolios.

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Credit Analyst

Credit Analysts assess the risk of lending money to borrowers. To make these assessments, Credit Analysts use a number of financial tools. This course will teach you to use technical analysis to evaluate financial statements, which will make you a more effective Credit Analyst.

See salaries and explore the career path for Credit Analyst

Insurance Analyst

Insurance Analysts provide guidance to insurance company executives on product pricing and business strategy. To do this, Insurance Analysts use technical analysis to evaluate market trends, identify new opportunities, and assess risk.

See salaries and explore the career path for Insurance Analyst

Compliance Officer

Compliance Officers ensure that a company's activities comply with all applicable laws and regulations. This course will teach you to apply technical analysis to detect unusual trading patterns. This knowledge will make you a more effective Compliance Officer.

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Actuary

Actuaries use mathematical and statistical techniques to assess risk. The indicators and patterns that you'll learn in this course will serve as important inputs to your actuarial analysis. This will enhance the accuracy of your risk models and improve your ability to forecast future events.

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Economist

Economists study how societies produce, distribute, and consume goods and services. This course will teach you how to use technical analysis to evaluate economic data. As an Economist, you can use this knowledge to provide more accurate forecasts and make better recommendations regarding economic policy.

See salaries and explore the career path for Economist