What is technical analysis and how does it work?

 As soon as you open an account you instantly gain access to over fifty markets across thirty countries at the push of a button. What to do next is the big question. Many people already know what they want to invest in. Others want to spend some time researching where they want to put their money. When it comes to picking stocks, there are two schools of thought on how to go about things: technical and fundamental analyses. In this article, we will explain technical analysis and show you how to get started with some of the more advanced tools available on your online account.

Trade With Powerful Tools & Insights

Whether you’re planning, investing, operating, or trading, we have the information, experts, and tools you need for more effective decision making. Watch the video for a brief overview, then browse the information below, and when you’re ready, you can use the “contact us” form on this page to get in touch. We look forward to showing you what over 54000 customers already know – for energy market participants and market operators, success begins with BW Financial Services.

Starting with investing – when do I step into the market?

One of the questions that starting investors often face is: when do you step into the market? For months, you’ve been seeing the stock price of a company you’re interested in rise, but you don’t dare to step in. What if it has already peaked? What if the share price collapses? If the price drops, you might ask yourself whether the bottom has already been reached. What if the price goes down even further? Timing the market is very tricky, especially in turbulent times. Nevertheless, there are ways to deal with it.

What is the ideal time to invest?

The ideal time does exist but focusing entirely on that moment is often unwise. Nobody can time the market perfectly. If you keep waiting for a low price, in many cases, you miss out on profits. Let’s look at an example using the S&P 500 index. Suppose you wanted to start investing in the middle of 2020. Let’s use 1 July 2020 as the exact date. You’re looking for the perfect time to get into the market to invest some of your savings. You choose an S&P 500 ETF, a frequently chosen product by beginners. You decide to wait until the price of this ETF takes a deep dive. After two years of waiting, the moment has finally arrived! After an upward trend, the S&P 500 falls to a price reading of 3,666 points within a few months. Almost 22% loss from its high. Your ideal time! But what if you had entered on 1 July 2020? On that day the S&P 500 was at 3,039 points. Even with the losses of the last few months, you would have gained over 20%. So, you see, the time frame over which you invest is often more important than perfectly plotting the right time to invest.

Spreading the moments you step in over time

Putting in a small amount every month is obviously less stressful than investing a big chunk of money in the stock market all at once. When investing small amounts at different times, you don’t have to worry as much about timing the market. For example, you can choose to invest some money on a fixed day every month. We call this method dollar-cost averaging. Step by step, you build up a nice investment amount. Because you do this gradually, you are less dependent on the vagaries of the market. One time you buy when the price is high, the next time when the price is lower. In the end, an average purchase amount remains and you are therefore not dependent on timing the market.