You know the saying: Keep It Simple Stupid. OK, I’m actually not calling you stupid (after all, you’re reading this, so there’s no way you’re stupid)!
But there are a lot of people out there who seem to think they sound smarter by throwing around a lot of fancy-sounding investing jargon. A lot of that jargon centers around the “technicals,” or, put simply, the price and volume movements of a stock. But for people who like to impress others, it’s fun to toss around terms like Bollinger bands, stochastic, MACD, the Relative Strength Index, and other obscure terminology. Maybe you believe a speaker sounds intelligent and sophisticated by using these terms. But the record really speaks for itself: Top growth investors of the past century, including Jesse Livermore and Nicolas Darvas didn’t use any more indicators than absolutely necessary. Fancier and more sophisticated isn’t necessarily better, when it comes to getting top-notch results!
Here’s the key to utilizing only the tools you need: Treat stock charts as something that can help you identify the best times to buy and sell.
Sounds simple, right? Good news – it is simple!
But people who like to seem sophisticated treat chart-reading as an end all unto itself, rather than as a tool to help you recognize buy points and sell signals.
Repeat after me: Charts are a tool to help your investing. They shouldn’t be turned into a second career. You don’t need 37 different oscillators to understand whether a stock is showing strength and being bought or sold by professional investors. We suspect that much of the reason people rely on these tools is to they can boast (to themselves, anyway): “This is complicated. I’m cool because I understand it.” No, no, no. The idea is to make good investing choices, not to tinker with the tools. The name “technical analysis” for chart reading is unfortunate. It scares many people off, and, simultaneously, gets many others (the geeky ones) excited about something complex with its own set of impenetrable jargon.
It doesn’t have to be that way. Chart reading doesn’t have to be complicated to be effective. There really are only a few basic elements you need to understand in order to make charts work for you, not the other way around. If you’re interested in learning some basics of chart reading, we’re here to help you with that at Simple Growth Investing. So relax. It absolutely doesn’t have to be as difficult at you might have thought.