Looking Back Is Easy; Looking Forward Is the Problem
When I started looking for ways to make consistent profits from the stock market, the first thing I learned about was technical analysis. With technical analysis, you use stock charts and various indicators to get a read for where a stock price might be heading.
The simplest explanation of how it works is that you look to previous price moves and try to pull out a pattern. So if a stock has a history of moving down to $10 a share and immediately moving $3 higher, then you buy at $10, hoping history will repeat itself.
However, if you’re going to use technical analysis, you have to understand that technical patterns in the stock market don’t always repeat themselves, because the many factors that affect price moves are never exactly the same. If you are convinced that history is always going to repeat itself, you are bound to hold onto your positions too long and lose a lot of money.
Of course, you will have some losses no matter what method you use to make your investing decisions. But with technical analysis, you’ll be able to quickly recognize your losers and cut them before they get worse.
[Ed. Note: Some of the most profound truths of investing are just as simple as the one investment analyst Charles Delvalle revealed above. And making money in the markets can be surprisingly easy, too. Learn just how simple it can be right here.]
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