Technical Analysis
Option traders try to predict the direction of movement of assets so that they can profit from the moves.
Technical analysis and fundamental analysis are two basic analysis methods used in the Foptions market to help predict future price movements. Technical analysis is most commonly used by individual option traders.
Technical analysis ignores fundamental analysis. It assumes that all known important factors are embedded in the price movements of the curency pair, which is analyzed. It postulates that the price at any given time is a reflection of everthing that is known by the market that could affect it. Thus supply and demand, political and economic factors, inflation, interest rates, and market sentiment have already been factored into the price. It takes the view that historical performance can predict future performance through predictable trends and patterns. Technical analysts look at the actual price movements, not the underlying factors that drove the specific price movements.
Important Concepts of Technical Analysis
Important indicators in Technical Analysis include:
When you are analyzing potential option positions, it
helps to have a computer program like Option-Aid that
swiftly calculates volatility impacts, probabilities,
statistics, and other parameters of interest. These
programs can pay for themselves with the first trade that
they help you with.
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