If you are a math and data based person, then you have likely delved into the world of trading and marketing for some time. If you haven't, then you really should, because it is perfect for you. Investing and trading is done with all sorts of data, pattern recognition, and analysis to look at the past history of trading and then using all of that to predict where the trades and values will go next.
But even with a love for math and a high education, it can still be very hard to understand what technical analysis is. This article is going to try and present a big picture view of what technical analysis is, and what the mathematical perspective is around it, so let's get started!
Technical Analysis Focuses On Price and Volume
One of several trading disciplines, technical analysis evaluates investments and helps traders find opportunities based on price trends and patterns. By looking at the trends and the data around what has come before, those in technical analysis seek to make better trades in the future by using the data to predict what comes next.
Basically, if you can gather enough data based on the past trading activity and the price changes of a certain security or stock, then you can make predictions on the future price movements. Most of the time technical analysis focuses on the age-old factors of supply and demand, and how they affect the price and volume of a security.
Supply and demand are pretty simple to understand, and are often summed up in the trading world as 'always buy low, and sell high.' In fact many people in the world of technical analysis use supply and demand for the basis of the analysis, and they simply try to see how the supply and demand reflect the market price movements.
The Rules Of Technical Analysis
Much like all other math based perspectives, technical analysis has a few rules that most people follow whenever they look at the data from a mathematical perspective. In fact, two of these rules were even coined by the man who first introduced technical analysis to the world: Charles Dow.
They are:
Markets show values representing all the factors that will influence the price of a security
The market price movements, even the ones that look random, move in identifiable patterns and trends that will tend to repeat over time.
This connection to trends as well as the fact that the history of a security will tend to repeat form the backbone of how mathematicians look at the data of a security with technical analysis. They are looking for the patterns in the price movements, because the market is covering everything else.
How This Affects Cryptocurrency
Now, technical analysis doesn't just need to be about stocks and securities and Wall Street. But it can also be used for cryptocurrency buying and selling as well. The main thing that everyone needs to know is that it is all about looking for trends and patterns, and once you find them, you can let past performance predict your future results
So even if you are a novice in the world of cryptocurrency or trading money around, if you are the type of person who can see patterns, you will be able to get a leg up. If you want to get started, then feel free to check out this Bybit referral bonus.
You Don't Have To Be A Mathematician
As complicated as all of this seems to be, again, you don't need to know a ton about math or the economy to start making good trades. You just need to see patterns, recognize them, and be able to make predictions. With those skills you'll be making good trades in no time!
