If you missed last weeks post, be sure to check out stock market investing mistakes part 6. This is our last entry in the series on the seven worst mistakes that people tend to commonly commit when investing in the stock market.
These are the kinds of mistakes that you should have seen coming, but most never do. You can avoid the embarrassment and regret that accompany these kinds of mistakes if you just take the time to learn about them and prepare yourself. That’s exactly what this series of entries was designed to do.
Don’t Forget Technical Analysis
The last mistake we’re going to talk about is the ignoring of technical analysis. When most amateurs “analyze” the stock market, they make use of qualitative or quantitative analysis.
They might be dimly aware of the school known as technical analysis, but usually they consider it far too… well, technical, to be of any use or interest to them. Chances are they just take a look at the charts and graphs that are normally associated with this method of prediction and their minds go blank.
In reality, as complex as technical analysis can be, there are some basic and fundamental techniques that are really quite simple to grasp and which can be quite helpful when the time comes to decide upon your next investment.
Technical Analysis Techniques
For example, buried amongst all those charts and graphs, you can find things like the “moving averages”, which show the overall performance and closing prices for stocks over a span of time, such as the last 100 days. With this information in hand, you can see at a glance whether the overall movement of a company has been up or down.
Furthermore, you can easily take in other important statistics like volume of purchase, which, when coupled with just a little common sense (and the type of knowledge you gain from this blog), are powerful tools for predicting the future movements of the market.
Well, that’s it for this series. Join us next time when we start looking at a new aspect of the market that’s sure to excite and educate. Until then, happy trading!
Sean Rasmussen
The Bullhunters Guide
Universal Wealth Creation © 2004 – 2009
{ 3 comments… read them below or add one }
Ha! This is what I would need software for! It is all a bit too technical for me – the analysis that is, not the article which is clear and easy to understand.
Hi Sean,
Technical analysis kind of appeals to me and my analytical nature. I like the thought of being able to use charts and figures to evaluate the worth of a stock before I buy it.
There’s a certain comfort in doing research and having the numbers tell you that you’ve made a good choice. Assuming you’ve done your research right.
I cannot trade without the use of technical analysis. It would be financial suicide not to do it.
I have a routine I go through every time I look for a trade. I have 1o indicators and if the trades don’t meet the criteria of those indicators then I don’t touch them.
I know there will always be another stock, another trade so I don’t need to expose myself to unnecessary risk. Never forget technical analysis.