Technical Analysis (TA)
Technical analysis is the practice of using price and volume data to value... Read More
Technical analysis is a branch of behavioral finance that studies collective investor psychology or sentiment. In any freely traded market, prices are set by humans or their mechanical proxies, and a price is set when demand and supply are at equilibrium at any particular time.
Chart patterns represent human trading activity because human conduct is frequently repeated, becoming identifiable and predictable. Technicians rely on recognizing past patterns and trends to predict future asset price patterns. For example, in bubbles, the price of an asset rises irrationally to high levels driven by hope and greed of investors. According to another premise of technical analysis, a market represents a combination of knowledge and attitudes. This is because every market has a varied collection of players.
Trades determine volume and pricing. Technicians analyze such technical market data as price and volume movement to try to figure out what investors are thinking.
Human activity has an impact on the fluctuation of security prices. Even if they have a favorable assessment of an investment’s fundamentals, an investor may sell a security for a variety of reasons, including the need for capital or margin. These acts cause the prices to fluctuate, generating trends from which technicians can benefit.
Unlike fixed-income and equity securities that have income streams, for asset types that do not yield income or do not have any underlying financial statements (i.e.such as commodities, currencies, and futures), technical analysis is oftentimes used..
Question
Which of the following is least likely used by technicians to determine trading patterns?
- Price.
- Volume.
- Market players.
Solution
The correct answer is C.
Technicians do not use market players to determine trading patterns. Technicians use price and volume to determine trading patterns.
Sergio Torrico
2021-07-23
Excelente para el FRM 2
Escribo esta revisión en español para los hispanohablantes, soy de Bolivia, y utilicé
AnalystPrep para dudas y consultas sobre mi preparación para el FRM nivel 2 (lo tomé una sola vez y aprobé muy bien), siempre tuve un soporte claro, directo y rápido, el material sale rápido cuando hay cambios en el temario de GARP, y los ejercicios y exámenes son muy útiles para practicar.
diana
2021-07-17
So helpful. I have been using the videos to prepare for the CFA Level II exam. The videos signpost the reading contents, explain the concepts and provide additional context for specific concepts.
The fun light-hearted analogies are also a welcome break to some very dry content.
I usually watch the videos before going into more in-depth reading and they are a good way to avoid being overwhelmed by the sheer volume of content when you look at the readings.
Kriti Dhawan
2021-07-16
A great curriculum provider. James sir explains the concept so well that rather than memorising it, you tend to intuitively understand and absorb them.
Thank you ! Grateful I saw this at the right time for my CFA prep.
nikhil kumar
2021-06-28
Very well explained and gives a great insight about topics in a very short time. Glad to have found Professor Forjan's lectures.
Marwan
2021-06-22
Great support throughout the course by the team, did not feel neglected
Benjamin anonymous
2021-05-10
I loved using AnalystPrep for FRM.
QBank is huge, videos are great.
Would recommend to a friend
Daniel Glyn
2021-03-24
I have finished my FRM1 thanks to AnalystPrep. And now using AnalystPrep for my FRM2 preparation. Professor Forjan is brilliant. He gives such good explanations and analogies. And more than anything makes learning fun. A big thank you to Analystprep and Professor Forjan. 5 stars all the way!
michael walshe
2021-03-18
Professor James' videos are excellent for understanding the underlying theories behind financial engineering / financial analysis. The AnalystPrep videos were better than any of the others that I searched through on YouTube for providing a clear explanation of some concepts, such as Portfolio theory, CAPM, and Arbitrage Pricing theory. Watching these cleared up many of the unclarities I had in my head. Highly recommended.