Individual Stocks

Selecting Individual Stocks

What are some basic assumptions employed when using technical analysis?

When you use any technical method to analyze stocks, it is generally thought to be based upon a few assumptions. Some assumptions include: that the price moves of stocks are completely dependent upon supply and demand for that stock, or for any stock; that human trading behavior is observable and repeatable over time; that important technical indicators and rules of when to buy and sell have been tested over many market periods; and that the historical price movements have a similar shape and form, indicating what might happen in the future to a security’s price.



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