Technical analysis is the study of price action through charts firstly to identify the trend and based on it, ride the trend. Within technical analysis, one generally makes use of price charts mainly candlestick charts, momentum indicators like an RSI, EMA or Stochastic oscillator coupled with tools like either Fibonacci projection or retracement or even Andrews Pitchfork or Gann fan. However there is always a dispute amongst technical traders as to which is more superior i.e. candlestick patterns or momentum indicators or forecasting tools.
Majority of technical traders solely rely on momentum indicators because they are easier to understand in terms of indicating highly overbought or oversold levels. Indicators are very useful for short term trades as they help you take quick decisions which is the need of the hour while doing intraday/swing trading. However, one should always remember that all indicators are ultimately derived from the closing price & hence all indicators are lagging indicators. i.e. they will always provide Buy/Sell signals after the candle has shown the reversal.
Using candlesticks alone is also a great way of trading or investing and making good money. There are so many strategies which can be adopted using important candlestick patterns or even Heikenashi candles which is a smoothened version of candlesticks. However, one needs tremendous knowledge of candlestick patterns and should be quick enough to identify trend reversals in order to consistently generate great returns.
Some traders also extensively use only forecasting tools like Fibonacci projection & retracement, Gann angles & other tools like Andrews Pitchfork etc along with candlesticks to successfully trade and make great money. These tools are tried and tested and help you understand support & resistance levels or Pivot points and accordingly take long or short positions.
However, you must understand like each human being is different from the other, so are trading or investment strategies. There is nothing called 100% right or wrong strategies in the market. Hence one must realize that one should stick to only those trading strategies or tools which help them make consistently good returns over a period of time without trying to ape someone or somebody else’s strategies. One should always remember that trading & investing is also a game of confidence & behavioral finance & hence should always choose consistency over greed at all times. Ideally, one should start slow and take smaller trades .i.e book smaller profits at the beginning and once you gain some confidence, one can start increasing their risk appetite by increasing their quantity purchased or Short sold. In the long run, ultimately, only traders with consistent strategies & sound risk management techniques are always the one’s to beat others in terms of percentage returns. Hence, like in life as well, one needs to trust one’s ability to execute the right strategies & believe in yourself to become a successful trader or investor.