Technical Analyst

A technical analyst, or technician, is a securities researcher who analyzes investments based on past market prices and technical indicators. Technicians believe that short-term price movements are the result of supply and demand forces in the market for a given security. Thus, for technicians, the fundamentals of the security are less relevant than the current balance of buyers and sellers. Based on the careful interpretation of past trading patterns, technical analysts try to discern this balance with the aim of predicting future price movements.

Technical analysts have developed an extensive toolbox of analysis techniques and indicators. Typically, the use of one technical indicator does not provide enough information to make a trading decision; technicians use several indicators to confirm a hypothesis before taking action. There is no broad consensus on the best method of identifying future price movements, so most technicians gradually develop their own set of trading rules based on their knowledge and experience. Technical analysts can work in either buy side or sell side firms. As of 2018, technical analysts earn an average income of $70,500.

Licensing is required for most technical analysts, although it does depend on the specific duties they perform, the organization they work for and the state in which they reside. The Financial Industry Regulatory Authority (FINRA) issues licenses to technicians who are sponsored by the firm that employs them. Many technical analysts hold certifications from industry recognized professional associations, such as the CFA Institute. To earn the Charted Financial Analyst designation from the institute, technical analysts must have relevant work experience and pass several exams. Other prominent associations technical analysts may belong to include, the American Association of Professional Technical Analysts and the International Federation of Technical Analysts. (For further reading, see: Financial Professionals: The Benefits of Joining an Association.)

A technical analyst observes and interprets the price action of a security to make predictions about its future direction. They apply this price data to statistical formulas to determine probable outcomes. Technicians may present their findings both internally and externally. For example, a technical analyst may present several tactical trading ideas at their investment firm’s morning meeting as well as giving a presentation at a client seminar. Technical analysts may also work closely with fundamental analysts to compile research reports that provide comprehensive analysis for stocks that a brokerage firm covers. (For more, see: Technical Analysis: Fundamental Vs. Technical Analysis.)