Effective Long Term Investing With Candlestick Charting
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  1. #1
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    Default Effective Long Term Investing With Candlestick Charting

    Effective Long Term Investing With Candlestick Charting

    Long-Term Investing, the norm for most investorís investment program. Investing in the stock market long term should produce an average annual return of 10%. Most investors are happy with a 10% annual return. The late 90ís produced inordinate back to back returns for a four year period. This was very unusual. The markets had never produced double digit returns for more than two years in a row throughout the market's history.

    Is long term investment viable at this day and age?
    Find out by visiting this site:
    http://www.candlestickforum.com/PPF/...andlestick.asp

  2. #2
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    I still prefer the short term trading, forex than the long term coz we'll never know about corporations and how they are doing in the future... sometimes it is beyond our control.

  3. #3
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    Yes, we can't just keep on looking at what happened to their business and besides, short term trading is more liquid, you can easily get back the money and the interest/profit as well and prevent losses at the first sign.

  4. #4
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    I agree with all of you guys, however, the advantage of long term trading is that you don't need to spend much time taking care of your investment, unlike the short term trading that you always have to be informed of what is the latest and you have to know the status every now and then of your trade.

  5. #5
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    Quote Originally Posted by belins View Post
    Yes, we can't just keep on looking at what happened to their business and besides, short term trading is more liquid, you can easily get back the money and the interest/profit as well and prevent losses at the first sign.
    Not sure what you mean here. Liquidity is the degree to which an asset or security can be converted into cash, without any discount. From the trader's perspective, this depends not on the time frame of the trade, but on the position size and on how willing the counterparty(-ies) is(are) to trade on your bid or offer.

  6. #6
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    Quote Originally Posted by larpih View Post
    I agree with all of you guys, however, the advantage of long term trading is that you don't need to spend much time taking care of your investment, unlike the short term trading that you always have to be informed of what is the latest and you have to know the status every now and then of your trade.
    Talk to any professional long term asset or fund manager, and they might disagree with you on this point. They may not be focused on the technical details of hourly charts, but they will certainly have a full day's regimen of reading and analysis in front of them when they walk into the office. It all depends on what you choose to focus on, but it is all hard work.

    There is a peculiar attitude extant on all trading fora -- longer time frames + less effort = improved odds. In my opinion, this is a market myth!

  7. #7
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    Quote Originally Posted by geline View Post
    Is long term investment viable at this day and age?
    YES, it is viable -- as long as the investor is willing to hold onto his or her stocks for more than a year at a time. (This is my personal opinion. I'm sure there are people out there who call themselves investors who hold positions for one year or several months at a time.) The markets may not trend as they did in the 80s, 90s or other periods, but they still appreciate.

    If the retail investor is lucky enough to have learned a good model and can at least match the market's historical rate of return, the next obstacle is keeping costs low. Commissions and fees are the first line of battle. The article below illustrates very well how overtrading an investment account can kill your earnings.

    The Wall Street Casino

    Pure speculative trading is an altogether different game -- really different. There are similarities between the two, but the paradigms are different. That said, it is possible to use candlestick formations to invest at value in a stock (i.e. at established support after a confirmed reversal pattern or after a continuation pattern following a topside breakout).

    The objectives of a stock investor, however, are not necessarily to sell at a predetermined price level, but rather to get in at a position with reduced risk (and a greater probability for success over time) and let its value grow with the company. As an example: In two, five, or even ten years, if the company is worth its salt the stock splits. The investor then does the due diligence on the company, and then picks his or her technical level to add to the position - again using high probability candlestick patterns, perhaps with another filter like RSI. This is how I could imagine someone doing it, at any rate.

    So yeah, an investor can use more than just a stock's financial and fundamental data to make investment decisions. Inevitably, some stock picks will languish or even go into the toilet. Some sectors will be hotter than others in the coming years, and I think many of us already have an idea of which - but investing in the right companies, in the right sectors, is something even the pros have a hard time doing with any regularity.

    Having a good research program, a good trading model, and a solid grasp of entry and exit techniques (such as those afforded by using candlestick-based price and indicator patterns) will hopefully level the playing field between the pros and the joes.

    Hope the article contributes to the discussion. It's not about candlesticks, but then again the question asked was "Is long term investing viable"....

  8. #8
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    Quote Originally Posted by churchille View Post
    I still prefer the short term trading, forex than the long term coz we'll never know about corporations and how they are doing in the future... sometimes it is beyond our control.
    And what happens with FX, then Church? You think at some point you won't get shaken out of a position because of some unforeseen event? I've been on the losing end of several such incidents, the most recent of which was a simple off the cuff remark by a certain Minister of Finance. Oh, and another time was when a few unhappy kids decided to bomb a London tube station while I was sleeping. Remember that? Remember Hurricane Katrina? What about the BoJ interventions not too long ago? And what about sudden structural adjustments in entire regional economies? Remember the Asian financial crisis? Okay, okay...I read about the Asian meltdown thing in high school, but at least I understand that FX offers no safe haven from the vagaries of market bubbles, massive fraud, and even simple mismanagement. This is a constant risk factor in the markets. (Hint: Look at the political, social and economic challenges looming on the horizon in China...think because you're not invested in the Chinese market that your 15min minilot position in the EURUSD is safe? Think again!)

    In the end, the whole crystal ball thing is a wash beteen the financial instruments. You either guess right or you don't. And short term trading is no remedy, either. All traders and investors must and do take precautions.

    Cheers

  9. #9
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    So many broken threads, with little or no interest in substantive discussion -- what is with this forum? Let's breathe new life in this very important topic:

    LONG TERM TRADING WITH CANDLESTICKS.

    Instead of directing you to a now defunct website, I thought I would talk about why I like candlesticks on long term charts and what some of my favorite patterns are.

    My favorite, perhaps, for the spot FX markets is the engulfing pattern. This isn't a one-off signal. I wait for a retracement and then enter at a more favorable price for the risk I'm willing to tolerate. I will usually look to enter on a 50% retracement of the daily engulfing candle, long or short.

    I also like inside days, or what are called Haramis. These offer very good risk to reward setups and the contracted volatility usually means a breakout is looming. This means greater probability for profits.

    Of course, if you're trading stocks, these formations have to occur at a favorable price point that also reflects the due diligence. In FX, it's a bit different in terms of the kind of analysis that is conducted.

    If, like today, the MPC surprised everyone with a 5-4 vote to hold rates, I would look at the overall trend of the GBPUSD in light of new interest rate expectations. (The surprise was in the level of dissent on the committee, not the decision itself.) I would then pick a level that in my opinion was close to a fair market value and wait for a nice setup -- usually a pullback and then a reversal pattern in the direction of the primary trend. I often get nice stop and reverse levels because I'm entering close to the pivot/swing. And if the trade works in my favor, I often cover much more than the initial risk.

    Anyone have ideas about their favorite Candlestick setups?
    Last edited by The Lonely Trader; 06-20-2007 at 04:52 PM.

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