What Is A Technical Analyst?
A technical analyst, also known as a "market technician" or "chartist", is a professional who uses technical analysis to measure and attempt to forecast future price movements of a tradable asset by using technical indicators and/or chart patterns.
Technical analysts use historical price charts and volume data of any tradable asset in order to help predict future price movements.
A technical analyst relies exclusively on price charts and volume data and does not care for the fundamental analysis of the financial instrument they are examining.
Technical Analyst Qualifications
Depending on the state in America, the qualification requirements for becoming a technical analyst will vary.
Typically, a technical analyst will need a license and certification in order to work professionally as a technical analyst.
Most certifications are offered by professional associations including the American Association Of Professional Technical Analysts, the International Federation Of Technical Analysis, the Chartered Financial Analyst Institute and the Chartered Market Technician Association.
The Financial Industry Regulatory Authority (FINRA) also issues licenses to technicians under special conditions.
For FINRA to issue a license, a technician will need to be sponsored by a firm that employs them (1).
A student technical analyst will need to complete multiple exams, examples include the Certified Financial Technician Exam (CFTe) and the Master Of Financial Analysis (MFTA) exam (2).
The most well-known exams student technical analysts take are the Chartered Market Technician Association (CMT) exams. The CMT exams are comprised of three levels as part of the CMT program, CMT Level I, CMT Leve II and CMT III Level (3).
The student will also need to have relevant work experience on top of passing exams in order to obtain a license.
Technical Analyst Tools Used
In order for a technical analyst to analyze financial markets, they will need a certain amount of technical analysis tools.
The tools technical analysts use include:
- Charting Software: This is software that provides real time price charts and volume data of multiple markets from stocks, bonds, commodities, currencies etc. It is the most important tool a technical analyst uses.
- Technical Indicators: A technical analyst needs access to technical indicators. Typically, technical indicators come with the charting program but they can be an additional add on that a trader may need to purchase from some charting providers.
- Technical Analysis Books: A new technical analyst will need access to technical analysis books for when they get stuck with understanding a particular indicator or chart pattern.
- Market Scanners: These are scanners that help alert technical analysts to potential technical analysis chart patterns or technical trading setups. Not necessary for all technical analysts but it helps speed up work.
Each individual technical analyst can use a group of tools but the one most important tool is charting software.
Technical Analyst Career
A licensed technical analyst has a number of career paths they can choose to pursue.
Typically, technical analysts choose to work in research firms, banks, hedge funds or financial media companies.
Technical Analyst Job Responsibilities
A technical analyst will have various job responsibilities. This will depend on the the firm they are working with.
In a bank or hedge fund, the job responsibilities of a technical analyst typically involves:
- Working with fundamental analysts to find top financial instruments to trade and invest in
- Analyzing price charts of financial instruments using technical analysis
- Presenting technical analysis reports and research either internally to a board or externally to clients
- Highlighting potential buying and shorting opportunities
- Developing technical analysis strategies to help with trading the markets
- Analyzing the overall market conditions
In a financial media company, the job responsibilities of a technical analyst are:
- Analyzing price charts of various financial instruments from stocks to currencies
- Writing articles/newsletters with technical analysis presented to the audience
These are the main responsibilities of a technical analyst.
Technical Analyst Job Salary
A technical analyst's job salary will vary depending on the firm an analyst is working with.
The average salary of a technical analyst will range between $50,000 to $80,000 per year (4).
Frequently Asked Questions
Below are frequently asked questions about technical analysts.
What Does A Technical Analyst Do?
A technical analyst spends their time using technical analysis to read price charts of financial instruments.
They apply technical analysis techniques like technical indicators and chart patterns to multiple markets including stocks, bonds, forex and commodities and try to spot patterns on price charts to help gain an edge.
How Long Does It Take To Become A Technical Analyst?
Becoming a licensed and qualified technical analyst takes between 3 to 5 years.
How Do I Become A Technical Analyst?
To become a professional and licensed technical analyst, a person should:
- Enroll in courses and exams offered by technical analysts associations e.g. Chartered Market Technician Association
- Complete the courses and exams in these associations and find a junior position in a bank, hedge fund or financial media company
- Gain work experience and apply for a license and take relevant licensing exams
This is the path to becoming a licensed technical analyst.
How Many Technical Analysts Are Employed In The United States Of America?
Currently, there are 251,492 technical analysts employed in America (5).