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RE: Diversify & HODL: The Risk Free Way to Retire Early
Technical analysis also works, if you are ok with 60% odds.
How did you come up with 60%?
Technical analysis also works, if you are ok with 60% odds.
How did you come up with 60%?
It is a rounded number from the basics of technical analysis. (books)
Given such a pattern in a stock price / volume, then the likelihood is that the stock is going to do X.
This is better than a 50/50 guess, but not by much.
If you see a cup and handle, the price is going to go up... a lot of the time.
If you see a shoulder and head, then you will probably see another shoulder... a lot of the time.
Statistics is nothing but history.
It does not tell the future.
60% chance of being right is still 40% chance of not being right.
Do not bet the house on the 60%.
Bet a little on many different assets that will moon if you are right.
Recommendation:
Black Swan by @nntaleb
The Black Swan is why I don't place any trust in the stock market at all.
And yes, technical trading is betting on just above average odds. But there are people who make a living off of it.
My recommendation, to be more succinct,
If you don't have the skill, the knowledge and the guts (emotional control) for technical trading, Don't do it. All you will do is lose money.
The problem is a lot of people will overestimate their skill, knowledge and emotional control for technical trading.
That is indeed very true. (And truth be told, many of them are just addicted to gambling.)
"If you see a cup and handle, the price is going to go up... a lot of the time.
If you see a shoulder and head, then you will probably see another shoulder... a lot of the time."
This is exactly how the large boys take your money. Because they know you know these things.