For novice investors and those with no direction to invest
"It's going to go up here."
"This is going to be a W base"
...This is what technical analysts often say. But these words to the novice hear, misunderstanding is big.It's not that technical analysis isn't a good idea, but some statements can give people the wrong idea.
I started with technical analysis.In order to arouse our interest in the class, the professor determined the semester grade by the performance of simulated investment, and also taught various fundamental and technical analysis methods in the class.Then I just went to the library and found a book on technical analysis.
Brin channels, SAR parabolas...After reading hundreds of indicators, I have a question in my heart: if it is so easy to make money, I am not already financial freedom? I'm pretty sure: technical analysis isn't that accurate, and by definition, it's better than flipping a coin.With a 50% chance of flipping a coin, it should have a 60% chance of winning.But if it was so useless, it wouldn't have lasted so long. You can often hear golden crosses on the Internet, and whatever follows is bound to happen.It's too focused on winning percentage, but winning percentage and making money are two things.Accuracy is not important. What is important is the consistency of making money.
"This is going to be a W base"
...This is what technical analysts often say. But these words to the novice hear, misunderstanding is big.It's not that technical analysis isn't a good idea, but some statements can give people the wrong idea.
I started with technical analysis.In order to arouse our interest in the class, the professor determined the semester grade by the performance of simulated investment, and also taught various fundamental and technical analysis methods in the class.Then I just went to the library and found a book on technical analysis.
Brin channels, SAR parabolas...After reading hundreds of indicators, I have a question in my heart: if it is so easy to make money, I am not already financial freedom? I'm pretty sure: technical analysis isn't that accurate, and by definition, it's better than flipping a coin.With a 50% chance of flipping a coin, it should have a 60% chance of winning.But if it was so useless, it wouldn't have lasted so long. You can often hear golden crosses on the Internet, and whatever follows is bound to happen.It's too focused on winning percentage, but winning percentage and making money are two things.Accuracy is not important. What is important is the consistency of making money.
So technical analysis has not become my primary investment method (although I still spend 20-30% of my money on technology today).Can technical analysis make money?Yes, not absolutely, but with some effect.The reason I don't use technical analysis is that I haven't found a stable enough method.There are many ways to make money in the long run, but not necessarily enough stability.
For example, there is a method that can make you 1 million dollars over 5 years, but needs 10 million dollars in the process.I don't think I have the strength to earn money that is not stable enough.The stability of technical analysis is very low, because what is seen is always the appearance.Technical analysis: share prices have reflected all the information.But it didn't. Maybe some of it was a reflection, but most of it was a guess.
Such as:A shareholder recently needed cash to turn around. He sold his shares, causing the share price to fall.But technical analysts have interpreted it as a sign that the company's big owners are selling out because they are not optimistic about the company's future.It doesn't matter what the final reasons are, it's just a matter of guessing whether the stock price will go up.The result is like flipping a coin. There will be a series of wrong guesses.
Low stability of the investment method, to have a strong psychological quality, not suitable for beginners.It is not that the technical analysis is not good. If we use the method of technical analysis, we should learn to accept the normal failure, stop loss and compensate in time, and we should be able to hold the profit when we have it.A lot of experience will also be needed to raise expectations of overall profits.The novice has no experience and is not mentally strong enough.
So I would tell novice investors to start with a more stable approach, such as value investing.It's much more stable than technical analysis, and it's much more logical.When you finish learning other methods to compare, you will find that the stability of technical analysis is really a person...
$Hang Seng Index (800000.HK)$ $Dow Jones Industrial Average (.DJI.US)$ $HKEX (00388.HK)$ $TENCENT (00700.HK)$ $BIDU-SW (09888.HK)$ $BABA-W (09988.HK)$ $JD-SW (09618.HK)$ $Alibaba (BABA.US)$ $Futu Holdings Ltd (FUTU.US)$ $BYD COMPANY (01211.HK)$
For example, there is a method that can make you 1 million dollars over 5 years, but needs 10 million dollars in the process.I don't think I have the strength to earn money that is not stable enough.The stability of technical analysis is very low, because what is seen is always the appearance.Technical analysis: share prices have reflected all the information.But it didn't. Maybe some of it was a reflection, but most of it was a guess.
Such as:A shareholder recently needed cash to turn around. He sold his shares, causing the share price to fall.But technical analysts have interpreted it as a sign that the company's big owners are selling out because they are not optimistic about the company's future.It doesn't matter what the final reasons are, it's just a matter of guessing whether the stock price will go up.The result is like flipping a coin. There will be a series of wrong guesses.
Low stability of the investment method, to have a strong psychological quality, not suitable for beginners.It is not that the technical analysis is not good. If we use the method of technical analysis, we should learn to accept the normal failure, stop loss and compensate in time, and we should be able to hold the profit when we have it.A lot of experience will also be needed to raise expectations of overall profits.The novice has no experience and is not mentally strong enough.
So I would tell novice investors to start with a more stable approach, such as value investing.It's much more stable than technical analysis, and it's much more logical.When you finish learning other methods to compare, you will find that the stability of technical analysis is really a person...
$Hang Seng Index (800000.HK)$ $Dow Jones Industrial Average (.DJI.US)$ $HKEX (00388.HK)$ $TENCENT (00700.HK)$ $BIDU-SW (09888.HK)$ $BABA-W (09988.HK)$ $JD-SW (09618.HK)$ $Alibaba (BABA.US)$ $Futu Holdings Ltd (FUTU.US)$ $BYD COMPANY (01211.HK)$
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Bobi2206 : Post too long
momomoomoo :
momomoomoo : must support pretty gal
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Ally-Lin OP momomoomoo : Thank you!
ahgong Ally-Lin OP : ok
Blossom Was Here : Thank you! I like the voice of your writing. Easy to follow.
Ally-Lin OP Blossom Was Here : Thank you for your support
thomasji01 : A good post. What does your portfolio looks like?
Ally-Lin OP thomasji01 : I have multiple accounts, each with a different investment philosophy