6 Reasons Long-Term Investors Should Learn Basic Technical Analysis

By | November 24, 2016

 

will-stock-market-crash-on-13th-september-2015-elul-29-last-day-of-shemitah

Stock Market is by far the best investment avenue that you can grow your money overtime. It can’t be ignored the promising reward you can expect from high profit margin with compounding interests. However, Being a long-term investor, we need to equip ourselves as much as possible to be able to complete the finish line.

I’m already investing for several years. After getting the the hang of it, I eventually shifted to be a trader at the same time. My goal is to maximize profit in trading and reinvest it on my existing stocks and add up. I studied the market, took time to learn basic indicators and price patterns, did my own trading plan and to my surprise, I saw my investment multiplied exponentially in a shorter period of time.

Here are the things that you might consider on why you need to study technical analysis and understand its importance in your investment journey. Trading might not be your thing, but being aware on what’s going on will go a long way. It is very important to learn it  and apply it on an investor’s perspective.

1. Hyped buying

 

trading-643722

I’ve heard many people asking me a dangerous question “What are the best stocks to buy these days and when to sell it”? I’ve seen it in many facebook groups and I can’t imagine how these people are halfway destined to becoming a victim. They are just helpless and very vulnerable to hypes and false tips. That was my mistake too, five years ago. I met this friendly and smart guy who’s welling to introduce me to promising stocks. That was I thought a very great opportunity.

Because I considered him as my mentor, I bought more and more shares from my hard-earned money and I was counting those “eggs ready to be hatched the next day”. I was so excited, up UNTIL…one day I saw my portfolio went down 45% and never heard from him again. And it went down and down…I had a paper loss of 50,000 pesos in just few months and as a newbie that was unacceptable. It was so embarrassing too. I did not know what to do and I did not want to tell anybody because it was so devastating to think that I was scammed. I had to figure it out to find an explanation and make my way out.

After selling stocks at a loss, I never opened my account for many months because of disappointment. After reading and doing thorough research, I’ve found out that I was hyped and the stocks I bought was already priced-in and oversold. Nahuli na ako sa pansitan! I took a vow not to depend on anybody’s recommendations and strategy again.

Risk is always there even for long-term investors. After all, risks are everywhere. You may lose money today even the slightest decision you’re making.

Take for example, If you bought stocks of  PLDT (symbol:TEL) few years ago thinking it is the best stock in the country, I can’t imagine how you will feel today when it goes down 50% in a short span of time. If you would still think to buy more because it’s on “bargain” because the market is down, think twice and beware. A stock will not go down  that much without a reason behind it.

2. Panic selling

 

dead-end-1529593_1280

 

News are so noisy these days, Peso is devaluing, jobs will be taken from us, World War 3, and Mars Attack is coming hehe! You may be looking on your stocks on red, suddenly you would be probably having a second thought “Should I sell it now?” This is another dangerous question! Several days ago, I’ve seen these guys posting their portfolio and asking help on what to do with it because of dropping stocks. Fear is eating them and ignorance is killing them as well.

I had my share on my newbie experience few years back. I was already so convinced that my stocks are one of the strongest in the market which are Banco de Oro and MPI, not only that they are blue-chip stocks but I’ve heard a lot of good news and progress from these organizations. I already set my goal that I will spend long years with these stocks.

Then one day, I’ve read something in facebook that the market was collapsing and stocks would go to the bottom. I got  scared and I could not sleep. I read more in other news outlets and eventually I decided to sell my stocks in fear that I would be losing my money. After selling it at a loss, I was astonished that after few days my stocks went  up and never look back. I was left with despair and asked myself “Am I missing something?”

3. Maximize profit when the market is bullish (uptrend)

 

With years of managing my own portfolio, I observed many things that are happening in the market on a daily basis. I understood the need of an investor to have a deeper understanding on how the market behaves and how to take advantage on some tools to be more efficient. I already made profit 80% and above just using basic indicators. Learning basics are already good for a start!

technical-analysis-forex-trading

Familiarizing yourself with support and resistance is a very basic indicator yet very helpful. Support is where the buying pressure is intense (where price is considered cheap) and Resistance is where the selling pressure is intense and where the price is considered expensive and somehow oversold. Spotting where it is located would be a great advantage and can already give you an edge to take profit or for you to buy stocks to it’s cheapest price.

4. Maximize buying when the              market is reversing from bearish trend(downtrend)

 

e-mini-russell-2000-index-2

What should we do when the market is on downtrend? I seldom trade when the market is on crazy ride because it so hard to go against the current. Some traders are doing it but for me I would just spend my time saving more and preparing my funds and wait for the best entry. I identify myself as a position trader but sometimes I do swing trading depending on the trend of my securities. I usually hold stocks 6 months or more until I sold it.

I also opened two accounts for pure investing and one for trading…For investing account, I bought dividend-players and value stocks. For example JFC, AC,Aboitiz,MER,MWC to name few of them. The rest are for trading and for profit-taking.

Know the trends, be active when the market is on downtrend to accumulate more shares and look for good entry. Since market is volatile, be familiar on when is the right time  to put your money. Sad to say, people are excited to invest when the market is sky-rocketing and get disappointed when the market is dropping.

Practice the Moving Average so that you would know some buying and selling signals and confirm trends of a stock. If you are more on accumulating, then this indicator will soon be your best friend.

mobile-phone-1419281_960_720

5. Manage risks

 

 

What if by all any means one day the stock market will crash just like what happened last 2008 plunging the market down to more than 50%?

Part of our responsibility is to protect our funds. We need to take time to check it and monitor the market’s health. I’m not saying that you have to check it everyday but at least you have the time to look at it and do your simple due diligence. After all it is your hard-earned money. Yes it’s true that you can put an amount of money, leave it for many years and you can expect a very good return. I even wrote an article about it on on my previous blog How to Invest in the Stock Market the Lazy Way?

I would agree with this statement but being able to minimize the risks is another thing. I consider my portfolio as my business and it’s what really is. Anything that will happen to my fund is due to how I manage it.

Take for example with this 10 year chart of S&P 500 in the U.S., If you have invested on it beginning 2003  disregarding the trend of the market. You will still end up negative after 10 years.

15129810_1155070931209359_925369610_n-1

6. Market Knowledge

 

It is very important to know what you are getting into. You don’t need to have business degree to learn basic economics. Do your part and learn it one at a time. I learned most of them in YOUTUBE University, The biggest school in the world! The biggest mistake that a trader-wannabe makes is to join social media groups and be so dependent with it. For me, you’re just making yourself dependent to the information of “so called gurus” thus putting yourself on the situation of building a false confidence.

Every week, learn at least one indicator. Support and Resistance, Moving Averages, Fibonacci Retracement, RSI, MACD, Stochastics, Price Action, and Japanese Candlesticks.

Conclusion:

 

Rather than following certain guru or mentor, I chose to attend training to educate myself. I attended seminars at Caylum Trading Academy and from Absolute Traders. They conduct seminars on a regular basis. It is relatively expensive but the learning you’ll get is far compared from what you paid for.  I also encourage you to buy The Trading Code by Jason Cam which is very helpful.

Bottom-line is, choose financial knowledge than anything else. I would rather spend much cash on learning how to make money than looking at your portfolio eaten alive by the market. Our market is a devouring being, if you will not be wise-enough, it will consume you. Being an investor is not an excuse to not grow and learn more, after all, it is your decision to do something for yourself…

  • I AM a Long-term investor
  • I AM a responsible position trader
  • I AM here to take advantage and earn from the market!

“An investment in knowledge pays the best interest”-Benjamin Franklin

61 thoughts on “6 Reasons Long-Term Investors Should Learn Basic Technical Analysis

  1. AvatarLobel Roderick Gemoya

    Learned a lot from you’re blog Sir….been in the market for 4mos. Traded once it’s successful thanks to trading code by Jason Cam. Pls email me if you have a talk here in Cebu I’ll be glad to attend.

    Reply
    1. Avatarinvestambayan Post author

      Thank you for reading my blog sir…Yes, I’ll get in touch with you.God bless

      Reply
  2. Avatarpaypal your account has been limited

    With havin so much written content do you ever run into any issues of plagorism or copyright violation?
    My website has a lot of unique content I’ve either written myself or outsourced but it appears a lot
    of it is popping it up all over the internet
    without my permission. Do you know any solutions
    to help prevent content from being ripped off? I’d genuinely appreciate it.

    Reply
  3. Avatarapuntes fotografia

    El Jurado tuvo en cuenta los siguientes criterios para la elección de los ganadores: en primer lugar la capacidad y sensibilidad en el uso de lenguajes contemporáneos en fotografía (necesarias para el aprendizaje y la ampliación de conocimientos en TAI), la personalidad expresada en las imágenes (fundamental para constituir una imagen de autor) y la coherencia del proyecto presentado (básica para la elaboración de trabajos fotográficos sólidos).

    Reply
  4. Avatarfacebook xbox live gold codes 2014

    I really like your blog.. very nice colors
    & theme. Did you make this website yourself or did you hire someone to do it for you?
    Plz answer back as I’m looking to create my own blog and would
    like to find out where u got this from. thanks

    Reply
    1. Avatarinvestambayan Post author

      hi there, I created the blog myself just doing self study

      Reply
  5. AvatarWebsite Traffic

    Buy Website Traffic from the leading worldwide traffic supplier. Buy Traffic from our trusted USA based company to increase your targeted web traffic today!

    Reply
  6. AvatarMiguelina Sticher

    Hi There! We are searching for some people that are interested in from working their home on a full-time basis. If you want to earn $500 a day, and you don’t mind developing some short opinions up, this might be perfect opportunity for you! Simply click the link here NOW!

    Reply
  7. AvatarSpeed Rank Seo

    After reading your blog post I browsed your website a bit and noticed you are not ranking nearly as well in Google as you could be. I possess a handful of blogs myself and I think you should take a look at speed rank seo, just search it on google. You will find its a very nice tool that can bring you a lot more visitors. Keep up the quality posts

    Reply
  8. AvatarPeter Pankowski

    Hi There! We are searching for some people that are interested in from working their home on a full-time basis. If you want to earn $100 a day, and you don’t mind creating some short opinions up, this might be perfect opportunity for you! Simply click the link here NOW!

    Reply
  9. Avatarhttp://youtube.com/

    Great blog here! Also your site a lot up very fast!

    What host are you the usage of? Can I get your affiliate link
    for your host? I desire my website loaded up as fast
    as yours lol

    Reply
  10. AvatarPassport Status

    Just desire to say your article is as astonishing. The clarity in your submit
    is just great and that i could suppose you’re
    a professional in this subject. Fine together with your permission let me to snatch your feed
    to stay up to date with drawing close post. Thank you a million and please carry on the gratifying work.

    Reply
  11. Avatarbanc de binary seriös

    Ich freue mich über jedes Like des Artikels 🙂 Hallo ich habe das auch
    mal probiert bei bdswiss und ich muss sagen ich finde vieles merkwürdig.
    Auszeichnen sollte sich eine geeignete Plattform durch ein solides System, das Kurse in Realtime überträgt.
    Captured salmon will be moved by field crews to the transport tanks daily depending on capture success in the river trap.

    Reply
  12. AvatarTashina Boudrie

    “Great Blogpost! Hi there! This is my first comment here so I just wanted to give a quick shout out_ and tell you I genuinely enjoy reading through your posts. Can you recommend any other blogs/websites/forums that deal with the same topics?”

    Reply
  13. AvatarJeff Guevarra

    “Great Blogpost! Hello there! Do you use Twitter? I’d like to follow you if that would be ok. I’m definitely enjoying_ your blog and look forward to new posts.”

    Reply
  14. Pingback: Google

  15. Pingback: Google

  16. AvatarNelly Kisker

    awesome story. I really enjoyed it. This entire website is great. We are a finance brokers. We have folks great home loans and other commercial loan.

    Reply
  17. AvatarOctavio Drozdowicz

    nice blog. I totlly liked it. This whole site is cool. We are a mortgage broker. I can provide people awesome home loans and other business finance.

    Reply
  18. Avatarmanchester city trøje børn

    Hi, i think that i saw you visited my website so i got here to return the desire?.I am attempting to in finding things
    to enhance my site!I guess its ok to use a few of your ideas!!

    manchester city trøje børn

    Reply
  19. AvatarTottenham Hotspurs Tröja

    I loved as much as you’ll receive carried out right here. The sketch is tasteful, your authored material
    stylish. nonetheless, you command get bought an edginess over that you wish be delivering the following.
    unwell unquestionably come further formerly again since exactly
    the same nearly a lot often inside case you shield this hike.

    Tottenham Hotspurs Tröja

    Reply
  20. AvatarNada Churn

    Great article. I really loved it. The entire website is interesting. We are a mortgage brokers. I got people great home loans and other commercial loan.

    Reply
  21. AvatarEwa Prible

    Great blog. I totlly loved it. The whole website is interesting. I am a mortgage brokers. I got people great mortgages and other business finance.

    Reply
  22. AvatarEusebio Lago

    Great post. I really loved it. Your whole site is awesome. We are a finance brokers. We got folks great home loans and other business finance.

    Reply
  23. AvatarWillie Helfin

    nice article. I really liked it. The whole website is interesting. We are a mortgage broker. We got folks awesome home loans and other commercial finance.

    Reply
  24. AvatarNed Nerby

    nice blog. I totlly enjoyed it. Your whole website is great. We are a mortgage brokers. We can give people awesome mortgages and other commercial loan.

    Reply
  25. AvatarLee Grabauskas

    Great story. I really loved it. The entire website is great. I am a mortgage brokers. I got people great home loans and other commercial loan.

    Reply
  26. AvatarTottenham Hotspurs Tröja

    This design is steller! You most certainly know how to keep a reader amused. Between your wit and your videos, I was almost moved to start my own blog (well, almost…HaHa!) Excellent job. I really loved what you had to say, and more than that, how you presented it. Too cool!|

    Reply
  27. AvatarJoseph Santoriella

    awesome story. I totlly enjoyed it. Your entire site is great. I am a finance brokers. We have people awesome home loans and other commercial loan.

    Reply
  28. AvatarJuan Tulloch

    Great blog. I totlly liked it. This whole website is cool. We are a finance brokers. I can provide folks awesome home loans and other commercial loan.

    Reply
  29. AvatarMaglia Arsenal 2017

    If some one wishes expert view about blogging and site-building then i
    advise him/her to go to see this website, Keep up
    the good job.
    Maglia Arsenal 2017

    Reply
  30. AvatarMadaline Selle

    awesome post. I really loved it. This whole website is great. We are a finance broker. We have people awesome mortgages and other business loan.

    Reply
  31. AvatarSkye Saliva

    awesome story. I really enjoyed it. The whole website is awesome. We are a mortgage brokers. I got people great home loans and other business loan.

    Reply
  32. AvatarSophia

    Really informative and great bodily structure
    of articles, now that’s user pleasant (:.

    Reply
  33. Avatartelecharger album jul 2017

    Engineers have come up with a solution to resolve these issues with a
    help of mobile software that will act as a mobile spy to monitor all the activities in a particular mobile phone.

    In order not to sound like that, you need a voice changer that has more than 2 or 3 adjustments.
    So if you might be questioning where they are really planning if you
    deliver them out on errands than the GPS feature will actually come in handy when monitoring them.

    Reply
  34. Avatarnoticiasdehoy.co

    Wonderful work! That is the kind of info that should be shared around the internet.

    Disgrace on Google for not positioning this publish upper!

    Come on over and consult with my web site . Thank you =)

    Reply
  35. Avatarjordan retro

    I have to show my thanks to the writer just for bailing me out of such a matter. As a result of searching through the world wide web and finding tips that were not beneficial, I thought my entire life was well over. Living devoid of the solutions to the difficulties you have fixed all through the article content is a serious case, as well as the ones which could have adversely affected my career if I hadn’t come across your website. Your good skills and kindness in touching all the stuff was useful. I don’t know what I would have done if I hadn’t come upon such a stuff like this. It’s possible to at this moment look forward to my future. Thanks for your time so much for your high quality and result oriented help. I won’t think twice to suggest the blog to any person who desires direction on this situation.

    Reply
  36. Avatarcheck

    First off I want to say fantastic blog! I had a quick question which I’d like to ask if you
    don’t mind. I was interested to find out how you center yourself and clear your head prior to writing.
    I have had trouble clearing my mind in getting my ideas out.
    I truly do enjoy writing but it just seems like the first 10
    to 15 minutes are lost just trying to figure out how to begin.
    Any recommendations or hints? Cheers!

    Reply
  37. Avatar88ms88

    Please let me know if you’re looking for a author for your blog.
    You have some really good articles and I think I would be a good asset.
    If you ever want to take some of the load off, I’d love to write some articles for your blog in exchange for a link back to mine.
    Please shoot me an e-mail if interested. Thank you!

    Reply

Leave a Reply

Your email address will not be published. Required fields are marked *