Chart Patterns Improve Your Trade Timing
Editor’s Note: There are two categories investors tend to fall into: technical traders and fundamentalists.
As a Trade of the Day reader who follows Bryan and Karim, you know this better than anyone.
Karim is Monument Traders Alliance’s Head Fundamental Tactician. He spends a lot of time analyzing the financial health of companies and tracking the insiders who know those companies best.
Meanwhile, Bryan, our Head Trade Tactician, focuses on technical analysis. Every day, Bryan identifies chart patterns that signal bearish or bullish patterns emerging in stocks.
But here’s the thing…
Bryan and Karim agree that successful trading involves using both techniques. It’s critical to a properly balanced trader.
And our friend Marc Lichtenfeld, The Oxford Club’s Chief Income Strategist, concurs. Check out his insights below on why both fundamentals and technicals have a place in successful investing.
Ryan Fitzwater, Associate Publisher
Investors often fall into one of two categories: fundamentalists or technical analysts.
Fundamentalists rely on company fundamentals, like earnings, debt, price-to-earnings ratio, etc.
This information is typically released in a company’s quarterly or annual statements.
It helps an investor determine whether they should invest in a company.
Technical analysts rely on chart patterns to tell them where an equity is headed.
This helps them answer two of the biggest questions investors have:
- When should I enter a position?
- When should I exit a position?
That secret is…
Fundamentals and technicals shouldn’t be polarizing – both have a place in successful investing.
After all, it’s not enough to know just if you should buy a company… You also need to know when to buy and when to sell.
And depending on your time horizon and investing goals, you may want to lean more heavily on fundamentals than technicals – or vice versa.
You see, in my Safety Net column and in The Oxford Income Letter, I lean heavily on fundamental analysis.
I look at metrics like income and cash flow to determine a company’s ability to maintain its dividend, and I also study the competitive environment to gauge a stock’s likelihood of rising.
This is often the best way to look at a stock’s viability for the medium to long term – and it’s a skill I honed while working at the contrarian firm Avalon Research Group.
But when I started my career as an assistant on a trading desk, executing trades and watching the “tape” for trends, I needed to find a way to make sense of all the data flying across my screen. Thus, I began to rely on technical analysis and chart patterns.
Now I can’t imagine making a trade without these tools. Using chart patterns is the perfect strategy for anticipating a stock’s short-term movements.
And if you can master just a few simple patterns… you can produce results that would be unthinkable for most investors. Here are a few of my favorites.
- The bull flag pattern
- The head and shoulders pattern
- Ascending channels
But what most people don’t realize is that there are inverses of these patterns that allow you to take advantage of downturns in share prices too.
- The bear flag pattern
- The inverse head and shoulders
- Descending channels
So far this year, I’ve used these patterns to produce four triple-digit winners for subscribers to my VIP Trading Research Service Technical Pattern Profits – despite the broader market going down around 19%.
And I’ve recently unveiled a new, powerful chart pattern that I call Project 9…
Because, like using the patterns I’ve mentioned above, utilizing it is easy – as easy as counting to 9. It harnesses tiny but potent “micro-bounces” in falling stocks.
Action Plan: I’ve prepared a special three-day training to reveal this pattern. It’s absolutely free to any Trade of the Day reader who’s interested.
And I’m so confident in Project 9 that – for the FIRST TIME ever – I will be making trades with my own money alongside Members.
Want to succeed as I succeed?