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Stock Investment Success

To gain stock investment success long term investing looks for intrinsic stock value and a margin of safety. Traders look for discontinuities, such as a breakout gap, that occur from day to day in the stock market. A long term investor will look for a stable stock with the strong potential for continued growth, dividend stocks that have paid out quarterly for a century. A day trader will look for a stock on the rise or on the decline. Penny stocks investing is a part of diversifying a stock portfolio for a long term investor and a means of looking for stock price volatility on the part of the trader. Both trader and investor look as stock investment success the same way. Success means profit. However, their means to the same end are different. The investor will lean more heavily on fundamental analysis and the trader will choose technical analysis. Both investors and traders can achieve stock investment success through the use of Candlestick charting to help predict profitable changes in stock prices. The Candlestick Forum Boot Camp is an excellent means of learning and practicing Candlestick pattern analysis.

If stock investment success is measured in profit by both traders and investors which is the better way to go? There will be strict advocates for both a fundamentals based long term investing approach and a day trading approach based on skillful use of technical analysis tools. The broad consensus lies somewhere between these to polar views. There are, indeed, stocks that have paid out dividends for over a century and will be considered very secure investments by virtually anyone. However, these stocks will rarely, if ever, experience the kind of stellar growth seen in a stock like Microsoft during its beginning days. The other side of the coin is that in picking stocks it is not always easy to find the next Microsoft to trade and an impulsive day trader can lose substantially if he does not consider investment risk in his trading. There is certainly no rule that prohibits a day trader from holding part of his assets in a set of secure and stable stocks. Certainly those who lost fortunes in hedging during the last stock market crash would have wished to have had a portion of their assets in stable stocks that did not evaporate overnight.

Even though long term investors will often define stock investment success as not having any losses there is more to it. During times of high inflation the purchasing power of a very secure and very stable investment may stay steady or even fall. Traders know this and look to profit during market reversal as well as rising market trends. Using Candlestick pattern formations a savvy trader will let the market tell him what the market is about to do. This works because the price patterns of the market repeat themselves. Knowing how to do technical analysis with Candlestick chart formations can lead to very profitable stock investment success in all kinds of markets, up and down.


Market Direction: The current reoccurring observations should be viewed as very important educational information. The Dow is a  clear example of a trend remaining consistent as long as it does not close below the T-line. This should not be analyzed as an irrelevant factor. Consistent trends allow the candlestick investor to produce much greater returns than what the market will generally provide. The patterns have been demonstrating very strong performances in the past few weeks. This is due to the lack of change in investor sentiment, allowing patterns to perform as expected.

DOW

Knowing that prices move based upon investor sentiment, it is important to acknowledge that without severe oscillations in a price trend, investor sentiment has a tendency to move from positive to exuberant the longer positive trend results remain in existence. The patterns illustrate the reoccurring thought processes of the investment minds. They are not going to act any different today than they did 100 years ago or 300 years ago. That knowledge is already put into a graphic depiction and very well explained by the Japanese Rice traders.

A Fry Pan Bottom pattern is the buildup of investor sentiment. If the overall market does not have any negative influence as the pattern is developing, investor sentiment has a tendency to become greatly enthusiastic. Where do most investors buy? Exuberantly at the top! Why does this phenomenon occur time after time? Because the human mind has elements of fear and greed built into the investment sentiment. The lack of any negative influence from the market indexes allows the rosy outlook to become stronger as time passes.

MBI

Big profits can be made in the market by knowing the best pattern results for specific market conditions. This is a powerful profit producing application for stocks but more so for options. Trading off of candlestick signals and patterns has multiple benefits. The most obvious is the large profit expectations coming from the confirmation of a signal or pattern. The next relevant aspect is the visual ability to recognize when a signal or pattern is not confirming. This allows for a quick close of the position. Both the signals and patterns have expectations. Utilizing these expectations develops an emotionless trading discipline.

Due to medical rescheduling, this weekends option training session will be postponed. We will reschedule as quickly as possible.

Chat session tonight at 8 PM ET

Good Investing,

The Candlestick Forum Team


Current Website Special

Fall 2010 E-Learning Online Training Schedule

Options Training Course 
October 16 & 17, 2010 
 Commodity Training
November 6 & 7, 2010 
 Boot Camp
November 20 & 21, 2010

Website special reflects current newsletter. If you are reading an archived newsletter you will be directed to Current Website Special.

 

 

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