Chart Patterns and TA

[gfp927z]

Using the 20 MA seems like an effective tool. When the stock is above the 20 MA, hang on, and when it breaks down under the 20 MA you sell. I haven't done all that much trading, but that seems like a good approach.

Unfortunately I learned TA a little too late, after floundering around for years without any clue at all about how to read a chart, with predictably bad results. But ultimately, the best idea is to not trade at all, but simply - 1) buy quality, 2) hold long term, 3) ignore volatility. That way, active trading not only isn't necessary, but is counterproductive..

I do use the charts (10 year) as a key screening tool for identifying the best long term stocks for buy/hold. Charts also help with the timing of the entry, ie wait for a pullback if the RSI is over 70, etc. But once you own the stock, you can just sit with it hopefully for decades. Using the S+P 500 index is the other part of the equation, since that eliminates the need for stock selection altogether.

So, no need to trade and no need for stock picking. But that gets pretty boring, especially if stocks and investing have become a favorite hobby. So maybe a small % could be allocated to active trading for fun, with strict position limits. But the only stocks I would consider 'trading' would be those that you wouldn't mind owning long term anyway (like Generac). Then if the trade goes against you, it's a solid stock and time will bail you out. But generally, the old saying is true - 'The more you trade, the more you lose'.



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