Technical Analysis

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Technical Analysis

In this video Ross, from Warrior Trading talks about technical analysis when trading. Technical analysis is leveraged by short term traders. These technical traders look at the trading price now versus historical trading price on a chart.

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Hey, everyone. Ross here from Warrior Trading. Today we're going to talk about technical analysis.

When it comes to trading, you've got two forms of analysis: fundamental analysis, and you can watch my video about that separately. Fundamental analysis is when you are looking at the fundamentals of a company: the PE ratio, the balance sheet, the earnings reports. You're really looking very closely at the headlines.

And then, the other camp is technical analysis. Now, most short-term traders and certainly active day traders like myself, we're really focused primarily on technical analysis. The problem with focusing on fundamental analysis is that, short term, you can see a divergence where the news is great, but the stock goes down, or the news is horrible, and the stock goes up. It doesn't always make sense.

So, as a short-term trader, I end up just focusing primarily on technical analysis, and that means I'm looking very carefully at the current trading price and the context of the current trading price versus historical trading prices. The way we see that is by looking at stock charts.

A stock chart shows us the historical price of a stock over any period of time that you want to look at, whether it's from the day the stock first IPO’ed on the market, or maybe you're looking just six months back, or just three months back. You can see the historical price action.

So, when we're looking at it from a technical perspective, we're asking ourselves, in the context of the previous historical price, is the current price high or low, relative to what's normal for the stock? Does the current price face potential resistance from a previous area where the stock was sort of topping out at? Is the current price near a historical level of support, where the stock was sort of basing at? And that can help us understand potential reward targets, profit targets, and also potential risk levels.

In order to better understand historical price action, a lot of traders will use what are called technical indicators. These indicators are mathematical formulation that are used to take historical price action and try to create a potential projection or understanding of what could happen in the future. And, of course, there's no such thing as a technical indicator that can predict the future of the market, so they're all somewhat speculative.

But, this is what traders use, and traders will use ... there's thousands of combinations of technical indicators and charting timeframes and charting types that you can choose from, whether you're trading stocks, ETFs, futures, 4X, or whatever, you can apply stock charts to all of these. In each different investment vehicle, there will be different stock charts that are more popular than others, and different technical indicators that are more popular than others.

So, we won't get into all the different technical indicators in this video. I just wanted you to understand the difference between technical analysis and fundamental analysis.

As usual, any questions, don't hesitate to leave them below.


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In this video Ross, from Warrior Trading explains Level 2 Market Data and how active traders can use this data to determine if a stock is bullish or bearish. This data explains the number of shares available for a specific stock, the number of tiers at a specific price, and much more.

Volume Weighted Average Price (VWAP)

In this video, Ross from Warrior Trading explain how to use the volume weighted average price and how it is different from a moving average. The volume weighted average price is available on intraday charts and is the average price of a stock over the course of a day.


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