What is the definition of technical analysis and how is it implemented?
A technical analysis is simply analysing the technical outlook of any financial instrument.
Every Sunday evening a technical analysis should be carried out in order to prepare yourself for the oncoming week. It enables you to identify what main markets to look out for and add into your watch list for the week. You would off course begin by analysing the overall momentum of the financial instrument from the higher time frames down to the intra-day perspective.
It is very essential to carry out your technical analysis in advance due to the fact that you can set market orders very early in the week, that is if you have a busy schedule and you will not be able to be behind a laptop when price has hit the level where a perfect trade entry is.
A market order is something we call an automatic entry in the world of trading. As you progress in your trading skills, you will acknowledge that there are profitable trade opportunities to enter in on, however the market has to hit an certain price for a confirmation of trade entry. You have the option to place a buy or an sell order. What a market order does is automatically triggers you in at the price you have set for entry, with a stake size, stop loss and take profit price of your choice. As mentioned, this is beneficial for those who have busy schedules during the week.
Once you have the relevant trading experience, you will realise that all instruments are very technical and forms frequent patterns that you can benefit from once you have perfected the skill. The main thing is to learn how to read price action, Studying price action movements, and key indications are the main movements you need to study and master, hence why using indicators in most cases are irrelevant. As you progress in your trading career, you will also acknowledge the importance of analysing each market from the higher time frames first before making intra-day entries (if you are a intra-day trader). You will understand that the higher the time frames, the more critical the key levels become. It’s similar to driving. Once you get the hang of it and you do it consistently, you subconsciously do the things that you initially thought was daunting with ease.