More Information Means More Trading Profits
You can overwhelm yourself with data, but finding the right balance is powerful.
This service is for general informational and educational purposes only and is not intended to constitute legal, tax, accounting or investment advice. These are my opinions and observations only. I am not a financial advisor.
There is a reason I prefer technical analysis.
Simply said, I trust the charts.
I don’t trust balance sheets, income statements, or management. I have too many years of experience on both sides of the coin to know better.
The first half of my career I worked for a fund and got to see from the inside what it was like when pricing models failed and management teams lied.
I also saw how precarious forecasts are. One or two slight changes to a number or calculation and things can change quickly.
The second half of my career includes working at a Fortune 500 company as an analyst, preparing quarterly reports for Wall Street.
It is amazing how many variables go into those reports. And a ton of pressure.
There is nothing about these experiences that I disliked. I have had a great and very fortunate career.
I am just saying the world is complex, the business world is no different, and trying to predict it by talking to CEOs and looking at balance sheets seems impossible to me.
Charts are simple. They require the ability to recognize patterns but not much more.
You can use charts to trade in the very shortest of durations, getting in and out of trades in minutes. Or you can take a long look at a trendline spanning ten years.
In either case, you’re recognizing patterns and trying to use them to put the odds in your favor.
Keep it simple. Trust the chart in front of you. It will tell you all you need to know.
Are rates going to continue to put pressure on markets or are we about done with seasonal weakness and about to move higher?
Will inflation persist and will that weaken the consumer? If so, what will that do to big tech? Energy? The S&P 500 or NASDAQ?
It can seem overwhelming and at times feel like we should expect everything to either take off to the moon or come crashing down.
If you are a technical trader and you trust your plan and analysis of the charts you’ve studied, it simplifies everything.
Let the Charts Show You the Way
You might have a channel that is trading well.
Maybe a moving average is providing perfect entry points and support.
Retesting of key levels before a big move is also on the table.
Regardless of which opportunity is presented, a technical trader has a pretty simple job.
Have a plan, follow the plan, and do not try to do too much.
For example, you might consider taking a long position if QQQ holds and bounces off of 354.18. However, if this level breaks you know the set-up is not there and move on to the next chart.
There is no need to consider how many rate hikes there will be or how unemployment will look.
Trust in the charts, become an expert at identifying patterns, and maintain a strict discipline around your trading plans.
These are steps I can understand and follow.
Have a great day of trading!
-Nate