how are trading techniques defined in financial markets?

There are two aspects of trading techniques being followed at the financial market index namely technical and fundamental trading.

Technical trading techniques derive profits on the basis of historical data of price movement of stocks and commodities whereas fundamental aspect focuses more on the forecast of the future earning capabilties of the market.

How do technical analyst derive their outcomes?

Technical analyst are sometimes referred to as Chartist because their main function is to look at charts and graphs of the historical trend in price movements and make an inference about the price movements in the future.So on the basis of their analysis they derive on a particular set of outcomes.

Basics of technical trading techniques-:

Their are two key terms used in the technical trading defined as support and resistance.

Normally resistance and support are defined as the price above which price cannot go and below which price cannot fall respecively.These are basically market psychology terms . For example:if we buy a share say at price $100 and and the market falls to price to $95 then basic human stratergy is to pray for the price to come at $100 and get out of this bad deal forever.Similarly this indivual view can be generalized to a group of people trading in the market.So as soon as the price of stock again approaches $100 people start selling in huge amounts and hence price starts falling again and declares a bearish phase of the market.Same can be generalised for the support case where the market declares a bullish phase.So basically on the basis of market psychological factor these support and resistance levels are formed.The graph shown defines the bullish and the bearish stage respectively with time to time changing support and resistance levels.