Technical Analysis (TA)
There are many courses out there teaching technical analysis, commanding fees of few thousands dollars just to teach you how to read a series of bars and lines. Question is, are they really useful? Can you become a millionaire by analysing chart patterns? Personally I feel that fundamental analysis is still more sound for investors holding long term, and I only know basic technical analysis, which I use to determine my entry point.
People who only use TA to trade should not be able to generate profits consistantly, taking into consideration transaction costs of buying and selling, and also the resources spent in identifying stocks (time is also money). This two points will always hold as long as markets are at least weak form efficient (read on efficient market hypothesis). And if they are not, I suggest you quit your job now, become a full time trader and we can all become millionaires.
And seriously, people who sell you courses by showing charts of stocks showing some "buying signal" and then an upward movement on the following days, coupled with big, bold caption "DON'T MISS THE CHANCE TO MAKE MONEY". I can show you many other charts with the same "buying signal" but not the result. This is what we call "with benefit of hindsight", stupid.
Don't believe? Take a look at the stock I hold: United Engineers
I entered at $2.13, virtually the highest point in recent months. I went in without looking at past prices, on the hope that it will ride the momentum, which had been proved wrong. This trade would have attracted mockery from "traders".
Two months on, we are still looking at the same chart, my entry point is the long white bar to the left of the red-line hump. The price today is $2.50. Before you say that I could have entered at a lower price, my fundamentals are not wrong. This stock is only trading at 0.5 P/BV ratio when I bought it.
So my question now to Mr Trader: based on technicals, am I supposed to exit tomorrow? Or must I wait for some "confirmation"?
Disclaimer: Please do not take the above mentioned stocks as a form of recommendation and start cursing me when you lose money. I would not mind that if you can share some of your wealth with me. Thank you.
There are many courses out there teaching technical analysis, commanding fees of few thousands dollars just to teach you how to read a series of bars and lines. Question is, are they really useful? Can you become a millionaire by analysing chart patterns? Personally I feel that fundamental analysis is still more sound for investors holding long term, and I only know basic technical analysis, which I use to determine my entry point.
People who only use TA to trade should not be able to generate profits consistantly, taking into consideration transaction costs of buying and selling, and also the resources spent in identifying stocks (time is also money). This two points will always hold as long as markets are at least weak form efficient (read on efficient market hypothesis). And if they are not, I suggest you quit your job now, become a full time trader and we can all become millionaires.
And seriously, people who sell you courses by showing charts of stocks showing some "buying signal" and then an upward movement on the following days, coupled with big, bold caption "DON'T MISS THE CHANCE TO MAKE MONEY". I can show you many other charts with the same "buying signal" but not the result. This is what we call "with benefit of hindsight", stupid.
Don't believe? Take a look at the stock I hold: United Engineers
I entered at $2.13, virtually the highest point in recent months. I went in without looking at past prices, on the hope that it will ride the momentum, which had been proved wrong. This trade would have attracted mockery from "traders".
Two months on, we are still looking at the same chart, my entry point is the long white bar to the left of the red-line hump. The price today is $2.50. Before you say that I could have entered at a lower price, my fundamentals are not wrong. This stock is only trading at 0.5 P/BV ratio when I bought it.
So my question now to Mr Trader: based on technicals, am I supposed to exit tomorrow? Or must I wait for some "confirmation"?
Disclaimer: Please do not take the above mentioned stocks as a form of recommendation and start cursing me when you lose money. I would not mind that if you can share some of your wealth with me. Thank you.
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