The Technical Tools used in Stocks Trading in the Netherlands
Over the centuries, there have been several characteristics attributed to the Dutch.
They are known as hardworking, dedicated and full of ingenuity. One can argue that it’s not just a stereotype but rather a fact because the Netherlands is one of the most highly developed countries globally.
In Europe, it stands out for its exemplary level of education, quality of life and standard of living.
This country has been leading from the front in many ways over centuries, from economic development, international trade relations to technological innovations and social advancements.
The characteristics mentioned above have also been adopted by citizens who excel at their work and aim to be leaders in every field they venture into, including stock markets were trading across various asset classes is done daily.
An excellent example of the spirit of the Dutch is their propensity for trading in stock markets. Even though there may not be too many publicly traded companies, they are active players in
Within the stocks market environment, an investor wants to invest his money long-term with dividends that he can collect year on year. The savvy investor always tries to buy shares at lows and sell them when they reach highs.
How does one ensure that he can make returns on his investments?
Every investor would want to see his portfolio rise across various asset classes. Some facts are common to all trades, whether it’s selling or buying, even for a small amount of time.
To make wise decisions, investors need more information than what is visible on the surface.
Every transaction in the market, whether it’s the buying or selling of shares, commodities or precious metals, has specific characteristics, which are called patterns. It can be defined as a repeated formation of trends over time which helps to distinguish between different types of price movements.
These patterns help investors make wiser decisions and take appropriate actions depending on their performance.
The following are four tasks that every investor needs to undertake before he carries out his trade
- Market research
- Technical Analysis
- Derivative instruments
- Hedging transactions
Trading stocks is a dangerous game. Very dangerous. You can profit from it; you can lose everything because of it. It’s what speculators do to make their living. Not everyone succeeds in this business, though.
To be successful does not come by luck alone, however. Some knowledge is also needed, and some brain cells need to start working now and then.
The point here is that there are different kinds of people who trade stocks: those who do so for the thrill (speculation), those who only go long-term (buy & hold) and those who use technical analysis.
Technical analysis consists of looking at the market prices through the prism of patterns that appear on charts over time, based on previous price movements.
Technical analysis can be seen as a game, like chess or playing the stock market. But it’s also an effective tool to make sure you don’t lose your shirt (or pants). Many traders who use technical analysis swear by it; that is why this article will discuss its utility in practice, especially about Dutch stocks.
To cut a long story short, using technical tools might give you an edge over other traders (and thus more chances to win) for two reasons:
- Other traders often do not understand these tools well enough and
- It takes time for them to react when new data arises. This makes it possible to predict where prices are headed next. They can support your trading and make a profit.
This Technical analysis is, of course, not the only way to make money on Wall Street, but its usefulness can hardly be stressed enough; it’s also pretty simple once you’ve mastered the basics.
Knowledge about technical tools helps increase your odds of success (there probably isn’t a trader alive who has never lost some or all his investment at least once), so let’s see how this works first.
The first thing you need to know about technical analysis is that indicators are indicators – they won’t tell you what to do all by themselves. It takes knowledge and experience to truly understand why these indicators work and thus when and how they should best be used.
Some people get stuck, but one can quickly learn about technical analysis by reading a good book.
Several different patterns can be identified on price charts. These include triangles, flags and pennants, head-and-shoulders and double tops/bottoms, rectangles and channels. Identifying these patterns is just the first step (learn this here).
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