Learning

Another Approach

Is technical analysis, also known as charting. Traders or investors derive useful “signals” based on chart patterns, usually with the aid of other technical indicators. Based on historical experience, chartists expect to see some high probability of predicting similar, repeating patterns or outcomes. This approach is fine if traders’ duration of trade is short to medium term. Precision is the keyword. If the expected outcome or chart doesn’t manifest itself in merely days ahead, that useful signal or trading opportunity is lost. Traders may have to leave the position or cut loss if a loss is incurred. Of course, ordinary traders may continue to hold to hopefully see the chart moves in the favorable direction in the near future.

Have an Active Vision, Strategy, & Roadmap to Reach Your Goals

Unlike the value investors, technical traders usually also trade in the down markets by short selling the assets, which makes sense as nothing can stop traders from doing so to make money if such situation warrants. This gives traders two ways to trade instead of waiting for a new uptrend market to take up position again. For this reason, technical traders have more time and/or opportunity to trade in the markets than value investors do.

In addition to value investing and technical charting mentioned above, there is another way to trade with higher probability of success, lower requirement to study, lower reliance on accurately predicting the market, less time and stress to manage, and more comfortable to enter and exit the markets. It is this third form of trading strategy that is the subject of next section and it is suitable to retail investors.