Even with the surge of web-based brokerages and the sheer sum of folks trading stocks from home, I am quite surprised with the current obscurity surrounding technical analysis. Sure there is a technical analysis community out there, yet it is hardly anything if compared to the rest of the trading community. Almost no people begin their trading career with the intent of utilizing technical analysis. Traders usually get started making use of fundamental analysis and learn about technical analysis either afterwards… or maybe not at all.
A very likely cause for this is our subjection to mainstream media. Whenever you read a finance website, the headlines are generally pertaining to quarterly earnings, mergers and acquisitions, or if we’re fortunate enough- the latest court case.
I guess “CIO love triangle” will usually pull far better ratings when compared with “bearish engulfing pattern”.
So this is the reason why the newbie trader is pretty much susceptible to a given way of trading. They turn on the tv, see a press release, and maybe read some hyped up forum posts. This is a harmful way to start, but for the brand new trader, this is par for the course. To make matters worse, new traders will usually tend to go toward penny stocks. The higher inherent danger is squashed by the perception of obtaining a larger amount of stock and the desire for a monumental gain.
Sure, I know- the true fundamental folks are taking part in a lot more than just watching the news and rolling the dice. But, the typical trader isn’t. The fresh trader is trading on ‘hot tips’, blog posts, and generally speaking other forms of hearsay. The dilemma is undeniable- average Joe is the last guy in the queue to hear the headline! By the time anything of importance makes its way to the public, it has already been passed to friends, colleagues, and ultimately just about anybody who is someone on wall street. I love taking a look at a stock chart soon after bad news is publicized. What? The stock started to tank a few days ago? Gee what a coincidence.
And for those of you who think we are all on a level playing field:
Next time you’re on the beach and decide to take a swim, make sure not to swim too far away – we would be so sad to see you tumble off the edge of the planet.
The opportunity for self-sufficiency is just what should make technical analysis so irresistible to the average joe. You aren’t at the mercy of yesterday’s news. Your number one tools are your charts, and your charts can’t misrepresent the facts. Moving averages, candlesticks, and patterns are honest and you will not need to worry about an unforeseen threat right around the corner. When you understand a TA strategy, it will not disappear and it can be employed as you wish, today, and in the coming years.
Give technical analysis a try, even if it simply means doing a a handful of paper trades. Turning off the press releases and depending on your own expertise is a rather awesome experience. I’ll always remember my very first technical trade. I discovered a breakout stock with a nice pullback coupled with a very small flag pattern. I chucked a bit of cash at it and established a snug stop-loss. And after three days, I had earned 40% and recognized my indicator to sell. I earned eight hundred bucks on a stock that I found with my own eyeballs, my personal strategy, and all from the enjoyment of my own home.
So now doesn’t THAT sound like a better way to trade?
To find out the big difference between an unsuccessful new trader and a triumphant new trader, go and visit Will Thorton’s free Technical Analysis Course. You should never start trading stocks without training. Play it safe and master Technical Analysis now.