Technical analysis
Technical analysis is the practice of studying past prices of a stock and changes in its trading volume in an attempt to discover whether it will go up or down in the near future.
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Expanded Definition
Technical analysis can range from the simple (moving averages) to the arcane (stochastic oscillators and Bollinger bands). The efficacy of these techniques is disputed, but many traders claim to use them to achieve much higher annualized returns than value investing legends such as Warren Buffett. If you think that Buffett's 11-figure mountain of dollars disproves this claim prima facie, consider that it took him 50 years, and he drives a Volvo, while many of the technical traders drive Ferraris and are under the age of 35, limiting the potential compounding of their wealth.
Technical analysis and the Motley Fool
Technical analysis does not seem to be very popular among the staff writers of the Motley Fool, especially not when used to the exclusion of fundamental analysis and valuation. However, many people swear by it, and many who examine fundamentals and valuation augment with technical analysis, especially to aid in timing. Practitioners of technical analysis seldom agree that "you can't time the market."
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