Beyond Technical Analysis

John Hopkins

John Hopkins

This is my first article as a new contributor to ChartWatchers. I'm a founder and president of Invested Central and many of you know my good friend and co founder of Invested Central, Tom Bowley, who recently joined and has been a contributor to ChartWatchers for many years.

At Invested Central one of our key missions is to educate traders. We've been doing this for over ten years and as a result I get a lot of feedback from members who share with me some of their struggles as traders. From deciding when to enter a trade, to deciding when to take a profit or deciding when to take a loss. And I've found that even the most experienced traders find it difficult to take their emotions out of trading.

So, my key goal as a contributor to ChartWatchers will be to help you confront and modify some of your own trading demons by focusing on what I term, "Beyond Technical Analysis" which centers on all of the "other" tangible and intangible considerations of trading that go beyond studying charts.  

I recently conducted a member survey that went out to our trading community that resulted in hundreds of responses. Here was the one question I asked:

Please rank in order of importance when making a trade:

-Price of the Stock
-Cost (broker fee) for making a trade
-Results (winning trades)
-Understanding Technical Analysis
-Size of the Trade

When I came up with this question I was mostly interested in seeing what was most important to traders next to the most obvious answer; Results, or "winning trades." For example, did the price of a stock really make much difference when making a trade? How about the cost to make a trade; was it really all that relevant?

What I ended up finding out was actually shocking. Only 50% of respondents listed Results (winning trades) as being the most important part of making a trade. Over 30% listed Understanding Technical Analysis as being the most important. 11% listed the price of the stock as being most important.

I really did expect 90%+ of the respondents would answer Results because why else would you get involved in a trade other than looking to make money? I realize for some people who have a lot of time on their hands (and maybe some discretionary cash to play with) that perhaps it's more of a hobby. That's fine. But I doubt this is true of the vast majority of people reading this article or who I polled who are part of the network at Invested Central.

Now, as someone who lives and breathes technical analysis, I applaud those who strive to understand technical analysis to the max. Stochastics, RSI's, Divergences, Moving Averages, Support, Resistance, all of these are critically important to understand when making a trade. But if you enter a trade without your number one goal being to make money, you need to step back and do some reprioritizing (I didn't make that word up.)

There isn't a better place on the planet than to get tools that will help you uncover high reward to risk trading candidates. I know this from many years of experience. Their scanning tools are phenomenal. And, if you've been reading the ChartWatchers newsletter for any length of time, you aren't going to find better technicians and writers who are willing to share their knowledge with you. But you also need to understand that there's another whole side of trading, "Beyond Technical Analysis" that I plan to share with you as a newcomer to ChartWatchers. So, here's my first lesson:

Don't get involved in a trade unless your number one goal is to make money.

I realize that many of you already get this. But numbers don't lie and when I see that half of the traders I ask are putting something else ahead of making money, well, we've got some work to do!

I'm going to conduct a FREE webinar on Tuesday, March 10, 2015 at 7:30 PM eastern that will dig more deeply into the concept of "Beyond Technical Analysis." I'll share with attendees some of the issues most traders face on a day to day basis. If nothing else, perhaps it will serve as a starting point for you to face some of your own demons and to take steps to make some positive changes that will increase your chances of success. Please join me! Just click here  to save your seat.

I'm very honored to be a ChartWatchers contributor and look forward to sharing my many years of experience with readers in the weeks and months to come.

Committed to Helping you Succeed,

John Hopkins
Invested Central