Technical Analysis for Direct Access Trading
Direct access trading provides stock traders with the opportunity to trade directly with market makers, as opposed to through stock brokers. This form of trading offers several benefits to frequent traders, including faster trade executions and savings on commissions.
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Day Traders/Swing Traders
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Direct access firms are popular with day traders and swing traders, who trade frequently and hold positions for a relatively short period of time. Many direct access brokers offer their clients proprietary trading platforms, which provide numerous tools for the technical and fundamental analysis of stocks, options, futures, commodities, and currencies. Technical analysis is particularly useful for short-term traders.
Technical Analysis
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Technical analysis is used to forecast prices based on examination and interpretation of past market data. Technical analysts are particularly interested in historical price movement, which is most effectively interpreted by studying charts. Underlying technical analysis is the assumption that investor psychology drives price action, and also produces price patterns that repeat across markets and time frames.
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Technical Analysis Tools
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Technical analysts use charts to evaluate asset trends and levels of support and resistance. Some technicians focus only on price. Many also consider trading volume as an indicator of institutional investor activity. Direct access trading firms generally offer traders a full set of technical analysis tools, including charting software. Quality charting software moves beyond price and volume data to include a variety of moving averages, and a long list of indicators and oscillators. These additional tools provide information on factors such as money flows, momentum, trends, and volatility.
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