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 [I][B]investment account[/B][/I] 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”…