This Element is an excerpt from The Options Trading Body of Knowledge (ISBN: 9780137142934) by Michael C. Thomsett. Available in print and digital formats.

The quick guide to the essentials of technical analysis: everything you need to know to get started.

Fundamental indicators are focused on profit, loss, and company valuation: They are backward-looking and test market success and financial strength. In comparison, technical analysis studies current price trends and related issues, such as price volatility and trading volume. Technical indicators come in many varieties, from simple to complex. However, the essential science can be organized into four major divisions....