Technical analysis is a way to predict future stock price trends using past market data. Many people have had positive results considering stock price and volume, however, academic mathematicians consider this method to be an overly simplified statistical analysis of market trends.

Over the past years, technical analysts have argued that a company’s specific data affects the price and value of their stocks, therefore making fundamental analysis unnecessary. The method of fundamental analysis utilizes a comprehensive company profile to predict future trends.

The purpose of Technical Analysis is to take the guesswork out of investing. It seeks to increase profits by predicting the future of the markets and trading against those predictions. Fundamental Analysis does the same thing but prefers to use different data, or use data differently. Perhaps more than Fundamental Analysis, Technical Analysis seeks to automate the decision making process by producing a purely quantitative measure of future trends.

One of the typical graph patterns used by professional technical analysts to make trading decisions is the, aHead and Shoulders.a Two similar-sized peaks with a higher center peak are graphic indicators. These patterns may not be mathematically valid, argue some critics, but the result of the psychological predisposition of humans to form patterns in a random geographical area.

The method of measuring and predicting market trends using quantitative methods may be limited. Subjective bias is evident when analysts give more or less consideration for certain statistical patterns or favor certain charting methods. Therefore, technical analysts traditionally ignore a great deal of quantitative data.

Machine learning and artificial intelligence are the new frontier for both technical analysis and fundamental analysis. These computers can make the decision making process of investing automated, without consideration of how much data can be physically processed by an individual.

Computers do not identify false patterns and are able to identify miniscule data that does not appear to relate to the trend being analyzed. Though analysts typically search for larger, more significant trends, computers can identify trends of any size.

It seems many current analytical paradigms will become less important as tools improve. Though it is unknown whether machines will replace technical analysis, it is certain that they will reveal the shortcomings of our prior techniques and help us improve them.

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