Advantage of Technical Analysis

Advantage of Technical Analysis


In this post, I will be discussing why I use technical analysis and what I consider to be my edge or advantage of technical analysis. I personally love tech analysis although these days I only use a few indicators and a simple strategy.

Over the years I have delved into this technical analysis rabbit hole and you really can go as deep as you want into indicators and theories etc… but at the end of the day what really works and what do you need to know? Do I need to be a mathematical genius to make tech analysis work for me? No you don’t it can be simple and easy you have to learn the language of the market, let’s have a chat about it.

TraderCobb

Advantages Disadvantages Technical Analysis

First, what is Technical analysis? In simple terms, it is the use of tools and indicators to interpret price movement, volume and volatility. In the old days, it was done by plotting lines manually on hand-drawn charts, now we have the internet and a multitude of tools at the click of a mouse. Technical analysis can be used on any security with historical trading data. Need to know more check out Investopedia – Technical Analysis

There is also some good books out there on this subject specific to crypto like – Technical Analysis of Cryptocurrencies: 1

Although it can get as technical as you like it does not have to be hard and you do not need to know it all to trade crypto successfully.

What is Fundamental analysis? Investopdia says – Fundamental analysis (FA) is a method of measuring a security’s intrinsic value by examining related economic and financial factors. Click this link for full version >>>> Fundamentals. In my words reading the news to find out what is happening with a particular coin. Finding out what news events might drive the price of a coin in one direction or another.

Fundamentals?

So why not Fundamental analysis you ask? For me I am not interested in fundamentals, that doesn’t mean I totally ignore fundamentals when trading. I do need to know when some major fundamentals might move the market but apart from that I am not really interested in fundamentals and I think it is open to subjectiveness – it is someone opinion. Some traders only use fundamentals and trade well, for me I love the charts and identifying trends and all the tech analysis stuff, it is just my personal preference, I also loved maths at school. The way I trade I only use Tech analysis so I will discuss that.

It can be Simple.


Like the chart above you can make it complicated or like the chart below it can be simple.


 

This chart is a simple way that I use tech analysis to identify my entries, A couple of moving averages and a simply MACD that is it, you don’t need all the other crap on your charts. I will say that I do use horizontal support and resistance levels and sometimes Fibonacci but that is it.

Over the years I have tried all sorts of tech analysis and studied all sorts of indicators. What you have to remember is that they are just Indicators they follow price movement, they indicate what might happen. What I found are the more indicators I studied and added the more reasons I had not to trade.

I had a perfectly good strategy that I thought I could improve by adding another filter/indicator but it would just contradict an already proven system and give me a reason not to trade. Frustrating I thought learning all these indicators for tech analysis would surely give me a big advantage, well it didn’t it just stopped me from trading. Now I have gone back to basics, have a good sound strategy and I am back to creating wealth with crypto.

Why I use Technical Analysis

I find tech analysis very interesting, like when you draw a Fibonacci level on a chart and watch price hit it exactly and then move off, it is like a self-fulfilling prophecy, I get a kick out of that. Technical analysis does really work. Fibonacci numbers occur in nature everywhere it is a little freaky. The spiral segments in that seashell all relate to Fibonacci. If you want to go down the Fibonacci rabbit hole Start here with Wikipedia >>>>>> Fib Rabbit Hole

The main reason I use tech analysis the way I do is that it is not open to subjectiveness, which means the signal is either there or it is not. I literally have a checklist and tick the boxes, if I can tick all the boxes I put the trade on. If I can not tick the boxes there is NO trade, simple.

This approach helps me to take the emotion out of trading. I know I have an edge with my strategy and if I can tick the boxes I place the trade – no emotion because I know over the long term I will be in front. Sure I have losing trades but overall I will come out in front, It is just a game of probabilities and I have the edge.

Trading this way takes the emotion out of trading for me which means I can make sound trading decisions. This is very important in trading and is the main reason I love using technical analysis.

Learn to Trade for FreeWhat I Need to Know

I mainly trade short term, I can be in a trade anywhere from a few minutes to a few days, technical analysis is suited to this style of trading. Fundamental analysis is usually used for longer-term trading.

So we have established I trade short term and only use a few indicators like I said it can be relatively simple, you don’t need to make it complicated. There are hundreds of indicators to use and hundreds of strategies that work so which one will you choose.

 

Conclusion

So I hope you could take something away from this article – Advantage of Technical Analysis

If you want to know how I personally use technical analysis to create Wealth with Crypto, the strategy and what indicators I use, have a read of my post Trader Cobb Review – It is worth your Coin? At the end of the day to create true Wealth with Crypto you need to find what suits you personally, Tech analysis is not for everyone. I have found a good mentor with the results to back it up in TraderCobb and I will continue to use the TraderCobb Method because it works for me.

Remember if you STOP your journey to creating Wealth with Crypto you are Guaranteed to Fail!

Crypto Dave


❗ DISCLAIMER: I am not a financial advisor. This is not financial advice. The content and material I provide on 2dsirecrypto.com is my opinion only and general in nature. Always do your own research before investing any money. You should always understand the risks involved in trading and investing and seek advice from licensed professionals before undertaking any investments of your own.


 

8 thoughts on “Advantage of Technical Analysis”

  1. It is very important to understand tech analysis before going right in for trading especially when you’re about to close down the demo account and go in with your actual fiat account. You gave good tips here but I believe just like you concluded that we need to find what works for us and use it.

    1. Hey Jackie, I believe tech analysis is important to understand but you don’t need to make it hard. Yes you do need to find what works for you personally. What are you using?

      Crypto Dave

  2. Hi Dave, thank you so much for putting this Advantage of Technical Analysis together. Much appreciated! I have just started researching how to trade. So, your post is right on time, I have even saved it for future reference. I am taking trading one lesson at a time and still working on getting the Fibonacci level down. I know once I get the hang of things trading will be like second nature. Thanks again for the helpful post Dave! See ya soon.

    1. Technical analysis does become second nature especially when you keep it simple, Fibonacci is one of the few tools I use as well so if you need any help with your fibs just ask, more than happy to help.

      Crypto Dave

  3. I really enjoyed the down to earth nature of your post. I never used to believe that technical analysis works, but then I got to thinking that technical analysis would pick up on things like insider trading. Of course that relates more to shares than crypto currency. What platform do you use? Personally, I use the CMC trading platform. 

    By the way you mention MACD in your post. I have no idea what that is. Moving Average Crypto Dolero?

  4. I have just started to do a little research in the field of trading, and I read various articles and posts on the internet on this topic.
    Your article Advantage of technical analysis broadened my horizons with a lot of useful information. It was interesting to read the paragraph about why you use technical analysis – but do you always stick to it, or do you ever take risks?
    Thank you for sharing your useful knowledge with us, it is very valuable to read the experiences of people who have been involved in trading for some time.
    Friendly greeting,
    Nina

    1. Hi Nina, Yes you MUST always stick to it, plan your trade and trade your plan. If you start breaking your rules I guarantee you will fail.

      Once you find your edge it is critical you the discipline to execute your trades flawlessly.

      If you are keen for knowledge start with the free course I know you will get a lot of value out of it. See BTC just broke $26,800, now is a good time to be into crypto.

      Crypto Dave

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