Hey hey: what's up my friend, so i'm sure you know what it's technical analysis and you are overwhelmed by. You know you have things like candlestick patterns, rsi, macd, fibonacci, retracement, pullback trend markets, breakouts, you know how do you actually make sense right out of all this madness out there? So in today's video i want to, you know, break it down to you step by step. What exactly technical analysis is all about? How do you actually make sense right from all the madness out there and you know, use it and improve your own trading results. So, let's be clear right, technical analysis.

There is a lot of trading tools and techniques out there, but you can pretty much break them down into four categories. The first category is what i call charts. You know this is where you get things like: candlestick charts line, charts bar charts, and if you want to dive deep, a little bit more candlestick charts can even be broken down into individual candlestick patterns. This is where you get things like: hammer, shooting stuff, engulfing pattern, etc.

So this is the first category charts and they are useful right to help you identify the current market condition. Is the market trending higher? Is it in an uptrend? A downtrend is in the range, so this is what candlestick charts are for and to also talk a little bit more candlestick charts or rather candlestick patterns. They are useful to help you serve as an entry trigger to tell you where exactly to enter a trade. Maybe when the price breaks above resistance - or it could tell you when to get out of your trade when you know setting your stop-loss, maybe below the lows of, for example, a certain level okay.

So this is the purpose of candlestick charts number two drawing tools. Drawing tools refer to things like support resistance. It refers to things like trend line trend channel, so these are drawing tools on your chart where, in essence, you're drawing things on your chart. That's why we call it drawing tools and drawing tools are useful to help you identify the area of value.

This is especially so for discretionary trader price action trader. You can actually use it to identify support resistance, identify where my potential buying pressure come in. Where might selling pressure come in to shop the markets and stuff like that? So this is what drawing tools are mainly useful to identify areas of value number three trading indicators. This could be things like rsi, macd, fibonacci, moving average and indicators.

They are very versatile because there are so many types of different indicators out there. We won't dive too deep into this video, because we just want to touch how indicators can help you from a technical analysis standpoint. So indicators can have many purposes. For example, they can help you identify your area of value, for example, a 50 period moving average in a trending market.

The price right tends to respect the 50 period, moving average, where you can expect it to. You know bounce it off a number of times. So the 50 period, moving average in this case, can serve as an area of value. At the same time, you have tools, like average true range indicator.

It can help. You manage your trade to set a proper stop-loss. So, for example, let's say the price has come into an area of support and you don't want to set your stop-loss just below the lows of support the price might spike through it and it reverse up higher. So how do you give it some buffer? So you don't get stopped out too early.

You can use a tool like the average true range indicator to determine right. What is the historical volatility of the market? It could be 20 pips for forex market. It could be five dollars for particular stocks. So once you have identified the historical volatility you can take that number or that buffer and then just add it below to the low of support.

So if support the low of support is like hundred dollars, the atr value is five dollars. Your stop. Loss can be hundred minus five and ninety five dollars, so this is how the atr indicator can help. You know manage your trades to set a proper stop loss and the fourth and final category is what we call volume.

Personally, i don't use volume in my own trading, but there are other traders out there who swears by so who am i to say that it doesn't work so for volume right. What most traders use it for is to, for example, identify the strength or weakness of a trend, so in the trending market market makes a higher high and higher low. So for people who use volume right when, when there's a pullback in an uptrend, they want to see decrease in volume and when the price breaks out of a new high, they want to see an increase in volume. So when they see this so-called pattern, right, they'll say that the trend is healthy, okay, so this is how volume comes into play and also when people, when some traders, when they trade breakouts, they want to see an increase in volume right to kind of you know, Say that hey this breakout has a higher probability of working out.

But again i don't use volume in my trading, but there are other traders who use it. So i'm just sharing this other aspect of technical analysis that you can consider so now. The final question is, you know: how do you actually use technical analysis in your training, there's so much out there? I just covered four brief categories, and within these categories we have like sub categories within it. So how do you actually make sense of all this technical analysis, knowledge out there, so very simple, right, two guidelines, for you number one know the purpose of it.

So i just briefly explained to you: what are the purpose of all these different technical tools out there, for example, charts can help you identify market structure. Drawing tools can help. You define your area of value, so know the purpose of all these tools. You must know the purpose, because without knowing the purpose, then it's going to be very difficult to know what fits right for your needs make sense know the purpose.

That's the first thing. Second thing is this: take what you need and discard everything else? So, yes, i've shared with you four different categories of technical analysis, but it doesn't mean that you must use everything from all. Four categories doesn't mean you have to use all indicators, because i just shared with you that i myself don't even look at volume in trading. So in essence, my training has now been boiled down to just those three categories, and if you want to take things a step further, you can just maybe just focus just on charts price action.

Just the first category. That's fine! If it works for you, that's fine! Who's to say that, oh that can't work. No, so you have to take what you need. You have to know that this is why it brings back to my earlier point.

You have to know the purpose of your tools and once you know the purpose, you know what you need. You can discard everything else, and this is really what a technical trader is all about right to take. What you need find the tools that meet your need and then ignore everything else. Everything else will be noise to you, okay, so with that said, i hope this helps.

I wish you good luck, good training. I will oh before that. We need to do a recap. So quick recap, right to what technical analysis is about in the big picture.

Number one charts right: it can be used. You know, as a charts to help you identify the current market structure. Market conditions right could be line, chart bar charts, candlestick, charts, etc, and within this category you have things like candlestick patterns, which is a little bit more microscopic in nature. Number two: you have drawing tools like support resistance trend, lines, trend channels to help you identify your area of value.

Number three. You have indicators like you know, average true range, moving, average rsi, macd et cetera, and it can help you to manage your trades. It can help you to identify area of value even and much more and number four volume right to help you assess right the strength or weakness of a market or a strength of a breakout, et cetera. So with that said, i wish you good luck.

Good trading, i will talk to you soon.