Any room on this forum for a thread on charts and technical analysis

[Vae Victis]

I for one am all for this and as I learn I hope to contribute. I've been watching Martin Shkreli's finance classes he posted before going to jail.

I am thinking this might be sarcasm?

[Craigslist]

I am thinking this might be sarcasm?

Its not, his finance lessons are great and go over technical analysis.

https://www.youtube.com/watch?v=VI_riscmviI&t=3220s&ab_channel=MrMartinShkreli

[Vae Victis]

I use some TA, bollinger bands, RSI, support and resistance levels, patterns and such.

Ultimately it's all voodoo and you can find any sort of patterns or information to support your thesis and some others that go against it. Some of them work because there's algorithms and large funds that use the same ones and can act much quicker than any retail trader can act.

Some people can use this and make some money, others will use the wrong ones and lose money. You need a lot of time to watch stock movements and most physicians or other full time employed people won't be able to act on these at the appropriate times.

I used to think it is was all voodoo too. And a lot of what you see put out there is.... a bunch of line drawing nonsense patterns. However, if you simplify the charts down and just look at price action and volume, it really is just a graphical representation of supply/demand and investor psychology. The same patterns have been around since the dawn of time.

My system is relatively simple and the charts that I look at reflect that. Price, volume, a few moving averages (10, 20, 50, 200 SMA). The only lines that I draw are horizontal support and resistance. That's it. I look for stocks that are rising, with a rising 50 DMA, and that are now consolidating in the uptrend. If I like the setup, I buy the breakout from the consolidation and place a stop just below the breakout line. I calculate my price target based on the width of the consolidation pattern and try to stay very disciplined about taking profit when that target is reached. I continue to work to refine my rules regarding entry and exit, position sizing, etc as I gain experience.

If no one objects, I'll start posting charts of my entries. I should say MOST of my entries as most of them are my own ideas; I do subscribe to one charting service (that is very cheap and provides EXCELLENT setups) and so I won't post those as that would be disseminating someone else's ideas. But I'll post the originals.

[Vae Victis]

Its not, his finance lessons are great and go over technical analysis.

https://www.youtube.com/watch?v=VI_r...rMartinShkreli

Ah I see; hard to tell with forum posts. I only know him as "pharma bro" and I figured there wasn't anything of value to him.

[CordMcNally]

I underperformed a buy and hold strategy in 2021 as I found my way into a personal strategy, which I didn't really settle in to until October or November. I was up about 10% in 2021 compared with, what 25% for the S&P? So not great in my first year but also not a complete catastrophe for a first full year of active trading. Most of the losses that hampered my performance were silly things, like chasing precious metals markets, etc. Since staying with this rule-based approach, however, I have outperformed the S&P. It's a short period of time of outperformance, which is why I'm not quitting my job any time soon, but I do think there is something to this. For instance, I am up just over 5% in the first few weeks of 2022 versus the market down 2%.

What's more important is that I am sleeping better at night knowing that my market risk is minimal. The COVID crash shook me and was a catalyst for me to critically re-evaluate my financial approach and I decided that I am uncomfortable holding through an event like that ever again.

Is that 10% net taxes/fees? I would call underperforming the market that much a minor catastrophe given the market climate.

It's actually interesting you feel like you sleep better at night feeling that you can minimize your losses (which, although theoretical, likely leads to underperformance) while also likely minimizing your gains. Maybe your biggest problem was checking your balances or you had too risky of an asset allocation for your risk tolerance. Had you done nothing you'd be sitting in a much better position at this time.

[Tim]

https://www.kirkreport.org/

https://stockbee.blogspot.com/p/mm.html

Position sizing is so important.
Two things I have found:

• Every system works, until it doesn't.
• It is extremely rare that someone that can successfully trade stocks will spend human capital "teaching" or "writing".

So many different trading approaches. IBD and swing and momentum are probably the most common.

Good luck.

[Nysoz]

I just call it voodoo because all the TA in the world can point to a probable outcome or move but then sentiment or actionable news can change everything in an instant faster than the retail trader can react.

Do feel free to post though. I mainly trade (sell) TSLA options and have made a few posts about what I do. By far most people here are Bogleheads but there’s a few people that trade/have fun with single stocks with a small portion of their portfolio.

[Random1]

https://alphaarchitect.com/2018/03/27/risk-based-explanations-momentum-premium/

It looks like you are trying to capture alpha by a momentum premium. If almost everyone in finance knows about the momentum premium, why do you think you can be more successful than others. Momentum works great in a mostly up market, it is terrible in a down market.

[The White Coat Investor]

Expect some pushback. I don't think charting or picking stocks are very good ideas at all.

It would also be nice to see you quantify your time, taxes, and other expenses as you try this. I find most who keep careful track of this stuff quit within a few years as they realize how poorly they are doing.

[Vae Victis]

Is that 10% net taxes/fees? I would call underperforming the market that much a minor catastrophe given the market climate.

It's actually interesting you feel like you sleep better at night feeling that you can minimize your losses (which, although theoretical, likely leads to underperformance) while also likely minimizing your gains. Maybe your biggest problem was checking your balances or you had too risky of an asset allocation for your risk tolerance. Had you done nothing you'd be sitting in a much better position at this time.

You are correct that I underperformed in 2021, but again this was my first year of active trading; I give myself some leeway for a learning curve. If you read on some of the greatest traders who have consistent success, most lost or completely blew up their accounts early on. So, while I agree that the underperformance was annoying, I personally don't label a 10% return a "minor catastrophe". Particularly since my previous allocation would have been something like 65/35 stocks/bonds and so my performance would have been less than the 25% returned by the S&P.

As for the checking too much, etc, I really didn't do that at all for many years. I would occasional check how the market was doing on CNBC or something, but would just shrug and go on with my life. I was very content.... and then the COVID crash happened. I don't know how it is for others, but some of my most profound life lessons and change catalyzing events have arisen from painful experiences. Watching my account that I had built up for years plummet by 30% or whatever it was certainly qualifies as that. The concept of holding through huge crashes just didn't make sense to me; it didn't hold water in my mind. It's not that I sold the bottom or anything like that. I held on, even put more capital in on the way down, and held on the way back up until I was back above where I was before the crash... but then I got out. It was at that point that I started trading, much as many people have done, to initially mixed results (to put it kindly). Put bluntly, I had no idea what I was doing. But I started reading, filtering out the noise, and trading. I got better. Now, I am learning, reading, watching charts and continuing to refine my technique, and my returns continue to improve.

I pride myself on being something of a pragmatist... if I am unable to generate returns that I am comfortable with, then I will re-assess my strategy or abandon it all together. Right now the trajectory of my returns is up and so I am not going to stop pursuing it. Many times in my life I have been told that I can't do something for this reason or that. A few times, the naysayers were right... most of the time, I was better off believing in myself. One thing I know for certain about myself is that I won't be content to take someone else's word for it.

[Vae Victis]

Expect some pushback. I don't think charting or picking stocks are very good ideas at all.

It would also be nice to see you quantify your time, taxes, and other expenses as you try this. I find most who keep careful track of this stuff quit within a few years as they realize how poorly they are doing.

Appreciate the support to move ahead. I will post my charts as I enter and exit them but I confess that record-keeping was never a strong suit of mine. I rely on Fidelity to tell me how much I've made . I'm in the top bracket so that is what I'm paying on the profits for federal.

[Vae Victis]

I just call it voodoo because all the TA in the world can point to a probable outcome or move but then sentiment or actionable news can change everything in an instant faster than the retail trader can react.

Do feel free to post though. I mainly trade (sell) TSLA options and have made a few posts about what I do. By far most people here are Bogleheads but there’s a few people that trade/have fun with single stocks with a small portion of their portfolio.

Right and I agree with that. Where I think people get into trouble is trying to use technical analysis to "predict". Predicting the future is impossible. You can, however, identify favorable setups for entry. The other thing that I see very often is plainly bad TA. People either projecting their beliefs onto a chart because they are nervous bagholders, or zealots for a particular asset class or whatever. Often the more complex TA is, the less likely it is to be of any relevance and more likely being generated to support a narrative.

[Craigslist]

Stop teasing me and post the charts!

[Vae Victis]

Stop teasing me and post the charts!

Ha. OK, a recent one that I closed (probably prematurely but following my rules). Berkshire Hathaway $BRK.B. Nice horizontal consolidation, bought the breakout on December 14 around $294. It gave a hard re-test of support and just barely stayed above my stop loss then rallied back above the resistance and took off in earnest. My price objective was calculated by applying the difference between the support and resistance ($272 and $293 --> $21) and so the target was $314 and that's where I sold it on 1/5/22. 6% profit booked.

[Vae Victis]

Another recently closed trade. Taiwan Semiconductor $TSM. I actually bought and sold this one twice; once on the initial breakout which started to reverse intraday after a strong open, so I closed at a small profit (maybe 1%). Then it fell back into the consolidation for a few days before breaking up and out again, at which point I re-bought on January 11. Rallied about to price objective 2 days later (1/13) and I was out with a 13% profit.