Technical trading

If you have been around in the investment world for a while, I'm pretty sure you might have seen charts like the below a couple of times already. Charts where analysts draw lines of al sorts of colors and shapes, and base their investments decisions on them. Where fundamental investing relies on the financial fundaments of a company, like revenue, margin, EBITDA etc, a technical trader will rely solely on charts and indicators to make his or her investment decisions. This discipline is also called chartism. 

Schermafbeelding 2020-04-23 om 14.00.34.

Technical trading is quite new and often gets negative feedback from fundamental investors as they believe that it is nonsense that valid investment advise could be derived from looking at charts only. However, if you listen to the technical traders' side of the story, they will tell you that no discipline within the investment universe will give you a 100% certainty when making an investment decision, which I believe is absolutely correct. Their argument tells that technical trading offers the possibility to further improve the chances of making a correct investment decision based on another set of information. 


A great success story of technical trading, and which is accessible to the general public, is TransTrader. This Belgian-based company developed algorithms based on technical trading, and sends out daily automated e-mails with investment advice to its subscribers, in exchange for a fee. By extension, TransStock is a computer program which allows to easily get access to charts and other information, and gives you the ability to execute your technical analysis on your own. 

Support & resistance
Modern Portfolio Theory