10 Tips to Getting Started With Technical Analysis

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Tip #2: The Smallest Changes Can Equal the Biggest Movements

Sometimes, spotting even the smallest deviation in a stock's "normal" (or expected) trading pattern can make a huge difference. And as you well know, a new "normal" is being defined practically every day, but there are decades of history that tell us how stocks reacted to similarly volatile conditions and events.

For example, if a stock doesn't trade above a certain level within a defined time frame, it may be that it will instead experience a new low. But if the overall market rallies and takes that stock up with it, the stock may instead run to new highs … simply thanks to the market having a good day instead of a bad one while the stock was trading in a particular pattern. At a very organic level, we use technical analysis to spot small changes in the charts before anyone else so that we can get positioned to enjoy large-scale profits in our trading accounts.

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