Together with the growing market of internet based brokerages and the large volume of people trading from home, I am rather surprised with the continuing lack of knowledge with technical analysis. Obviously there is a technical analysis circle on the internet, yet it is nothing compared to the rest of the trading world. A small number of people start their trading career with a technical analysis mindset. People generally start out utilizing fundamental analysis and stumble on 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 suppose "CEO ponzi lawsuit" will usually draw stronger blog traffic than "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 realize that the real fundamental traders are going through a bit more than just reading a blog and hurling a dart at the wall. However, the everyday newbie trader just isn't. The new trader is trading on stockholder advice, news stories, and generally speaking a pile of speculation. The dilemma is painfully obvious- average Joe is the last guy in line to get to hear the headline! By the time it finds its way to the general public, it has already been passed to family and friends, associates, and generally speaking just about anybody that is anybody on wall street. I love examining a stock chart after bad news is released. What? The stock began to decline a few days beforehand? I can't imagine why.
And for those of you reading who believe the SEC can actually protect against insider trading:
The next time you happen to be on a lovely sandy beach and want to go for a swim, please be careful not to swim too far away as you may slip off the edge of the earth.
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.
Every new trader should give technical analysis a swing, even if it merely means carrying out a couple of paper trades. Switching off the press releases and relying on your own expertise is a relatively nice feeling. I'll not soon forget my very first technical trade. I discovered a breakout stock with a great pullback and a smaller banner pennant. I chucked a little dough at it and established a tight stop loss. And after three days, I had made 40% and recognized my indication to sell. I earned 800 greenbacks on a stock that I discovered with my very own eyes, my own personal judgment, and all from the warmth of my very own home.
So now doesn't THAT sound like a better way to trade?
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 suppose "CEO ponzi lawsuit" will usually draw stronger blog traffic than "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 realize that the real fundamental traders are going through a bit more than just reading a blog and hurling a dart at the wall. However, the everyday newbie trader just isn't. The new trader is trading on stockholder advice, news stories, and generally speaking a pile of speculation. The dilemma is painfully obvious- average Joe is the last guy in line to get to hear the headline! By the time it finds its way to the general public, it has already been passed to family and friends, associates, and generally speaking just about anybody that is anybody on wall street. I love examining a stock chart after bad news is released. What? The stock began to decline a few days beforehand? I can't imagine why.
And for those of you reading who believe the SEC can actually protect against insider trading:
The next time you happen to be on a lovely sandy beach and want to go for a swim, please be careful not to swim too far away as you may slip off the edge of the earth.
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.
Every new trader should give technical analysis a swing, even if it merely means carrying out a couple of paper trades. Switching off the press releases and relying on your own expertise is a relatively nice feeling. I'll not soon forget my very first technical trade. I discovered a breakout stock with a great pullback and a smaller banner pennant. I chucked a little dough at it and established a tight stop loss. And after three days, I had made 40% and recognized my indication to sell. I earned 800 greenbacks on a stock that I discovered with my very own eyes, my own personal judgment, and all from the warmth of my very own home.
So now doesn't THAT sound like a better way to trade?
About the Author:
To find out the difference between an unsuccessful new trader and a triumphant new trader, check out Will Thorton's absolutely free Technical Analysis Class. Don't jump into the market without educating yourself. Play it smart and master Technical Analysis right now.
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