Can technical analysis be applied to all stocks?

[pirx]

On a few occasions, I have noticed people discussing, whether technical analysis can be applied to certain stocks (like penny stocks, or stocks with low volume) or not.

So I´m wondering, is there a certain criteria for a stock to meet, before it can be analysed for a more probable result?

Thanks!

 

[JTrader]

Hi pirx

I would say that technical analysis can be applied to any financial instrument, regardless of its volume, price, gaps, slippage etc.

By looking at the stock on a chart, one can see things like gaps. I there are gaps in the prices from bar-bar or-candle-candle, it is an indication that the stock trades thinly on low volume, with slippage occurring. Therefore, because of it's unpredictabilty in the fluidity of it's movement, it may be a stock that certain traders would want to avoid, as they may not be able to apply their TA and money management strategy to the stock with much confidence.

But this does not mean that TA cannot be applied to it, because the TA has already helped you identify the nature of the stock (price, fluidity, gaps/slippage, volume - if you put it onto a chart).

Cheers

jtrader.

 

[pirx]

Thanks for the explanation, jtrader!