The 5 crypto trading strategies that every trader needs to know - IG
3. Moving Average Crossovers 4. Relative Strength Index (RSI) 5. Event-driven trading 6. Scalping 7. DCA (Dollar Cost Averaging)
technical indicator
Trading moving average (MA) crossovers requires an understanding of MAs, and crossover trading strategies. Let’s start at the beginning: a moving average is a lagging <anchor>technical indicator</anchor> combining the price points of a financial instrument over a specific timeline, dividing by the number of data points to give you a single trend line.
Technical Analysis Definition | What Does Technical Analysis Mean
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- Technical analysis definition

# Technical analysis definition

## What is technical analysis?

Technical analysis is a means of examining and predicting price movements in the financial markets, by using historical price charts and market statistics. It is based on the idea that if a trader can identify previous market patterns, they can form a fairly accurate prediction of future price trajectories.

It is one of the two major schools of market analysis, the other being fundamental analysis. Whereas fundamental analysis focuses on an asset’s ‘true value’, with the meaning of  external factors and intrinsic value both considered, technical analysis is based purely on the price charts of an asset. It is solely the identification of patterns on a chart that is used to predict future movements.

## Discover our range of technical analysis tools

Learn more about our online trading platform, including our interactive charting packages.

[Learn more](/en-ch/trading-platforms)

## Examples of technical analysis tools

Technical analysts have a wide range of tools that they can use to find trends and patterns on charts. These include moving averages, support and resistance levels, Bollinger bands, and more. All of the tools have the same purpose: to make understanding chart movements and identifying trends easier for technical traders.

## Pros and cons of technical analysis

### Pros of technical analysis

Being able to identify the signals for price trends in a market is a key component of any trading strategy. All traders need to work out a methodology for locating the best entry and exit points in a market, and using technical analysis tools is a very popular way of doing so.

In fact, technical analysis tools are so commonly used, that many believe they have created self-fulfilling trading rules: As more and more traders use the same indicators to find support and resistance levels, there will be more buyers and sellers congregated around the same price points, and the patterns will inevitably be repeated.

### Cons of technical analysis

There will always be an element of market behaviour that is unpredictable. There is no definitive guarantee that any form of analysis – technical or fundamental – will be 100% accurate. Although historical price patterns give us an insight into an asset’s likely price trajectory, that is no promise of success.

Traders should use a range of indicators and analysis tools to get the highest level of assurance possible, and have a risk management strategy in place to protect against adverse movements.

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Discover how to trade with IG Academy, our series of interactive

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[Go to IG Academy](/en-ch/learn-to-trade/ig-academy)

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- ### [Three top forex trading strategies](/en-ch/trading-strategies/three-top-forex-trading-strategies-40787-171121)

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- ### [What is forex?](/en-ch/forex/what-is-forex-and-how-does-it-work)

- ### [Three moving average trading strategies](/en-ch/trading-strategies/three-moving-average-trading-strategies-42097-180209)


[A](/en-ch/glossary-trading-terms#A) \- [B](/en-ch/glossary-trading-terms#B) \- [C](/en-ch/glossary-trading-terms#C) \- [D](/en-ch/glossary-trading-terms#D) \- [E](/en-ch/glossary-trading-terms#E) \- [F](/en-ch/glossary-trading-terms#F) \- [G](/en-ch/glossary-trading-terms#G) \- [H](/en-ch/glossary-trading-terms#H) \- [I](/en-ch/glossary-trading-terms#I) \- [L](/en-ch/glossary-trading-terms#L) \- [M](/en-ch/glossary-trading-terms#M) \- [N](/en-ch/glossary-trading-terms#N) \- [O](/en-ch/glossary-trading-terms#O) \- [P](/en-ch/glossary-trading-terms#P) \- [Q](/en-ch/glossary-trading-terms#Q) \- [R](/en-ch/glossary-trading-terms#R) \- [S](/en-ch/glossary-trading-terms#S) \- [T](/en-ch/glossary-trading-terms#T) \- [U](/en-ch/glossary-trading-terms#U) \- [V](/en-ch/glossary-trading-terms#V) \- [W](/en-ch/glossary-trading-terms#W) \- [Y](/en-ch/glossary-trading-terms#Y)

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