Seedly PFF 2019
Asked on 01 Mar 2019
Well, I wouldn't recommend using charts to choose the right stocks.. At the very most, charts are just used as a phychological guidance as to when to enter the stock, but even then, it is based on past movement and does not take into account future business potential.
And to be honest, fundamentals and (future) valuation of the business is all you really need!
Charts are not meant for choosing stocks, unless you are a trading who is relying on TA to find shares purely for short term gains. In such a case, you'll look at various technical indicators such as moving averages, volume, RSI, etc to determine when to enter and exit.
However, a chart can still be used to identify entry and exit points whereby one can identify certain key support and ceilings, or use fibonacci retracement to guess which price might be a good point to enter. E.g. I would like to buy DBS at $20 but there is a strong support at $22. If it ever breaks below $22, I can probably enter a position, since $20 is very unlikely and I might have to wait till a recession to enter.
Initially, I was a chart geek
I would have a big monitor monitoring different charts.
But after being a value investor for several years,
I stopped looking at charts a lot :)
You will find your own style and discover what works best for you :)
I grew up watching youtube videos to teach myself investing.
I found out that successful investors over the long term still focuses on fundamentals.
I think it depends on your investing style?
Besides numbers, quality of the business is the most important part. Qualitative part will tell you more than what numbers can. Especially for the management part.
Chartting cant help you to determine if it is a good stock. Only help you to determine tour entry and exit. More to speculation.
A chart simply tells you whether the price is right to buy, hold, or sell the stock. Other than that, I won't trust it to help me choose my stock.
In addition to fundamental analysis, I will study market trends and read broadly on market news. Through this process, I get to understand the market sentiments associated with the stock and whether it is a worthy pick.
Here is everything about me and what I do best.
I dont think charts can help you choose the right stock, it most likely can help you decide what would be a good entry price to enter should you decide to buy in the counter within the next few days/weeks.
That said, I would always looked at the historical price chart of a stock dating back to the 2008 financial crisis. If the current prices is still below the pre-crisis stock price, its an indication to me that the company ability to bounce back from a recession is mediocre at best. Be more worthwhile to direct my attention to other stocks
I think looking at chart is useful if you are looking for short-term profits, however, it may never be accurate all of the time.
Understanding a company, the management and the growth drivers are far better because you are able to give the management time to execute and you are avoid to ignore the short-term movements as you're not trading.
You can use a chart to see the price trend of the stock. Then ask why the price is going like this.
Usually I'll use a chart to find an entry point rather than use it in stock selection.