How to Learn Technical Analysis with DailyFX

Learn Technical analysis: Main Talking Points

  • Technical analysis is a popular field of study for FX and commodities traders as it can help to make trading decisions with an eye on risk management.
  • At DailyFX, our analysts and strategists share several different technical analysis methodologies and practices in their reviews of the markets, which can inform trading strategies and help to shape key decisions.
  • DailyFX technical analysis also includes a plethora of research and education on this topic, and this article goes over some of the more popular resources available to traders, each of which are no cost and available to all.

Technical Analysis at DailyFX

Trading may seem simple at surface level because almost every human being has the same ability to open and close a trade. And given that the future is truly uncertain, it can seem as though a new trader has the same chance of winning on any given trade as even the most grizzled of market veterans. But with time and enough examples, it often becomes clear that there is more to trading than just picking the right market and ‘guessing’ correctly a certain number of times.

There’s strategy, and technique, and a plethora of ways to go about ‘trying to see around the next corner’ in order to attain desirable results. Like most other endeavors in life, this usually takes time and experience for an individual to learn how to best do this for themselves.

One of the keys often incorporated along the way is technical analysis, or the premise of using the chart and past price movements to help make trading decisions. Technical analysis is simply an examination of the past, and this is often carried out with a chart to try to identify patterns or scenarios that could give the trader ideas as to how to best move forward in a given market.

Getting Started with Technical Analysis: Learning the Basics

1. Swat up on the basics with our Technical Analysis for Beginner’s guide

Building a solid foundation of the core elements of technical analysis is key for any trader looking to progress and succeed in trading. How can technical analysis improve your trades across the financial markets, and what are the key tools, concepts, charts and indicators required to master your technique? Learn more in our guide to the basics of technical analysis.

2. Get a comprehensive introduction to the application of technical analysis with DailyFX Trading Education

At DailyFX our trading education section includes a dedicated module compiled over a range of articles covering the main areas of technical analysis. Here you can explore key concepts such as chart reading, using technical indicators, and how time frame analysis and sentiment analysis to assist with buy/sell decisions. to assist with buy/sell decisions.

3. Get to grips with Price Action: A popular field of technical analysis

A field within technical analysis that is quite popular on DailyFX is price action, which is the study of price movements without the assistance of indicators. The articles listed below can help improve your understanding and boost your confidence in this field:

Uncover the foundational concepts of price action trading

Observing the principals of using price charts to reveal trade opportunities

Price action can expose certain ‘swings’ during market trends

Implementing the fundamental price action techniques of support and resistance can lead to identifying breakout trades

Delve deeper into price action analysis with pin bars and candlesticks

Learn how to use price action to effectively employ sound risk management parameters

Keep emotions in check by using trailing stops to erase ‘what if’ scenarios

4. Sign up to our weekly webinar series on scalping

DailyFX Technical Strategist, Michael Boutros has put considerable work into his scalping webinar series in which he hosts weekly sessions. In this session, Michael Boutros of the DailyFX team will talk analyze markets with a shorter-term focus.

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Uncover insights into scalping with Michael Boutros

Weekly Scalping Webinar

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5. Tune into our podcasts on top technical analysis tips and strategies

At DailyFX we enjoy hosting podcasts with a range of market technicians and experts in the field of technical analysis. For an introduction to more advanced technical analysis, check out the following podcasts where our DailyFX analysts offer tips on technical analysis beyond chart reading and into the realm of deep-dive analysis:

6. Join Paul Robinson’s ‘Becoming a Better Trader’ Webinar Series

DailyFX Currency Strategist, Paul Robinson conducts free webinars entitled ‘Becoming a Better Trader’ in which technical analysis plays a key role in his approach. To get in on the live sessions, sign up to his Becoming a Better Trader webinar series now, or check out the following articles which cover some of his core principles in depth:

Discover the benefits of a sound trading plan

See the potential in high probability chart patterns like the ‘head and shoulder’

Consistency in trading applies to many different components which are key to achieving regularity

The top-down approach to trading can guide traders to more improved trade opportunities

Keep in mind the complexity around proper risk management for optimal results

How Technical Analysis Can Help Traders

Technical analysis is highly valuable for identifying trading opportunities, but it’s important to remember this trading approach is not a prediction tool. Given that technical analysis is an analytical field and merely examines what’s already happened, it would be nonsensical to argue that the past perfectly predicts the future. New things happen and changes are expected; and while history often rhymes, it rarely repeats with perfection – and this is where technical analysis can help.

One of the reasons that technical analysis garners its popularity is because of its ability to help with risk management, which is a key stumbling block that separates many new traders from their experienced counterparts.

This was the primary premise in the DailyFX Traits of Successful Traders series, in which it was identified that many retail traders will often have winning percentages of greater than 50%. But these same traders lose so much more when they’re wrong than they win when they’re right that, at the end of the day, they end up staring at a red net loss.

Technical Analysis Assistance with Risk Management

There’s no doubt about it: technical analysis can help with risk management. For example, if a trader has a bullish bias on a market, they can wait for support to show, at which point stops can be set below the support level. If that bullish bias plays out, and prices run-higher, the trader can then scale-out of the position at a more favorable price. But if, on the other hand, that bullish bias does not play out, the trader can be taken-out of the move with the goal of loss mitigation as that idea ‘didn’t work.’

Rather than trying to constantly outguess the markets, in which prices are often set by banks and followed by some very sharp professionals that have made careers of making markets, the retail trader will often make more efficient strides towards desirable results by focusing on risk-reward ratios. Or, to put it otherwise, risking a Dollar to try to make two. That way, even if the trader only ‘guess right’ 40% of the time, the possibility of a net profit can remain. It is always important to remember that where there is the possibility of profit, there is also a risk of loss.

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