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Why Do Signals Help You Make Smart Investing Choices?

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http://profitableinvestingtips.com/candlestick-trading/why-do-signals-help-you-make-smart-investing-choices

Why Do Signals Help You Make Smart Investing Choices?

Making smart investing choices is the key to making a profit and avoiding losses. But, how do you make smart choices? What analysts do you listen to and when do you follow the herd versus being a contrarian? There are signals that seem to occur in every market situation. But, why do signals help you make smart investing choices?

Avoiding the Twin Demons of Fear and Greed
When the value of an investment, like a stock, is going up, it is easy to become greedy. And, when the value of that investment starts to fall, it is easier to become fearful. These traits are not limited to you, Ms. or Mr. Investor. They tend to be shared by the majority of investors. Successful long term investors have gone through many business cycles and have come to recognize some basic signals. None other than Warren Buffett has advised investors to be fearful when others are greedy as noted in an article by Investopedia.

Warren Buffett once said that as an investor, it is wise to be “Fearful when others are greedy and greedy when others are fearful.” This statement is somewhat of a contrarian view on stock markets and relates directly to the price of an asset: when others are greedy, prices typically boil over, and one should be cautious lest they overpay for an asset that subsequently leads to anemic returns. When others are fearful, it may present a good value buying opportunity.

The problem with applying this adage is market timing. For example, stocks have been on their way up for years. It is true that the S&P 500 is down on the day, week, and month. And it is unchanged from its value at the beginning of the year. But it is nicely up over 5 years and hugely up over ten years. In this regard, why do signals help you make smart investing choices? One good reason is that they help you avoid letting fear and greed drive your investing decisions.

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Why Do Signals Help You Make Smart Investing Choices?

  1. 1. Why Do Signals Help You Make Smart Investing Choices? By www.ProfitableInvestingTips.com
  2. 2. Making smart investing choices is the key to making a profit and avoiding losses. http://profitableinvestingtips.com/candlestick-trading/why-do-signals-help-you-make-smart-investing-choices
  3. 3. But, how do you make smart choices? What analysts do you listen to and when do you follow the herd versus being a contrarian? http://profitableinvestingtips.com/candlestick-trading/why-do-signals-help-you-make-smart-investing-choices
  4. 4. There are signals that seem to occur in every market situation. http://profitableinvestingtips.com/candlestick-trading/why-do-signals-help-you-make-smart-investing-choices
  5. 5. But, why do signals help you make smart investing choices? http://profitableinvestingtips.com/candlestick-trading/why-do-signals-help-you-make-smart-investing-choices
  6. 6. Avoiding the Twin Demons of Fear and Greed http://profitableinvestingtips.com/candlestick-trading/why-do-signals-help-you-make-smart-investing-choices
  7. 7. When the value of an investment, like a stock, is going up, it is easy to become greedy. http://profitableinvestingtips.com/candlestick-trading/why-do-signals-help-you-make-smart-investing-choices
  8. 8. And, when the value of that investment starts to fall, it is easier to become fearful. http://profitableinvestingtips.com/candlestick-trading/why-do-signals-help-you-make-smart-investing-choices
  9. 9. These traits are not limited to you, Ms. or Mr. Investor. http://profitableinvestingtips.com/candlestick-trading/why-do-signals-help-you-make-smart-investing-choices
  10. 10. They tend to be shared by the majority of investors. http://profitableinvestingtips.com/candlestick-trading/why-do-signals-help-you-make-smart-investing-choices
  11. 11. Successful long term investors have gone through many business cycles and have come to recognize some basic signals. http://profitableinvestingtips.com/candlestick-trading/why-do-signals-help-you-make-smart-investing-choices
  12. 12. None other than Warren Buffett has advised investors to be fearful when others are greedy as noted in an article by Investopedia. http://profitableinvestingtips.com/candlestick-trading/why-do-signals-help-you-make-smart-investing-choices
  13. 13. Warren Buffett once said that as an investor, it is wise to be “Fearful when others are greedy and greedy when others are fearful.” http://profitableinvestingtips.com/candlestick-trading/why-do-signals-help-you-make-smart-investing-choices
  14. 14. This statement is somewhat of a contrarian view on stock markets and relates directly to the price of an asset: http://profitableinvestingtips.com/candlestick-trading/why-do-signals-help-you-make-smart-investing-choices
  15. 15. when others are greedy, prices typically boil over, and one should be cautious lest they overpay for an asset that subsequently leads to anemic returns. http://profitableinvestingtips.com/candlestick-trading/why-do-signals-help-you-make-smart-investing-choices
  16. 16. When others are fearful, it may present a good value buying opportunity. http://profitableinvestingtips.com/candlestick-trading/why-do-signals-help-you-make-smart-investing-choices
  17. 17. The problem with applying this adage is market timing. http://profitableinvestingtips.com/candlestick-trading/why-do-signals-help-you-make-smart-investing-choices
  18. 18. For example, stocks have been on their way up for years. http://profitableinvestingtips.com/candlestick-trading/why-do-signals-help-you-make-smart-investing-choices
  19. 19. It is true that the S&P 500 is down on the day, week, and month. http://profitableinvestingtips.com/candlestick-trading/why-do-signals-help-you-make-smart-investing-choices
  20. 20. And it is unchanged from its value at the beginning of the year. http://profitableinvestingtips.com/candlestick-trading/why-do-signals-help-you-make-smart-investing-choices
  21. 21. But it is nicely up over 5 years and hugely up over ten years. http://profitableinvestingtips.com/candlestick-trading/why-do-signals-help-you-make-smart-investing-choices
  22. 22. In this regard, why do signals help you make smart investing choices? http://profitableinvestingtips.com/candlestick-trading/why-do-signals-help-you-make-smart-investing-choices
  23. 23. One good reason is that they help you avoid letting fear and greed drive your investing decisions. http://profitableinvestingtips.com/candlestick-trading/why-do-signals-help-you-make-smart-investing-choices
  24. 24. The Market Follow-through http://profitableinvestingtips.com/candlestick-trading/why-do-signals-help-you-make-smart-investing-choices
  25. 25. The stock market seems to be correcting, driven by a too-strong dollar, what is shaping up to be a permanent trade war, and the Trump tax cut stimulus wearing off. http://profitableinvestingtips.com/candlestick-trading/why-do-signals-help-you-make-smart-investing-choices
  26. 26. As such, many investors are adjusting their portfolios as witnessed by a flight to quality investments. http://profitableinvestingtips.com/candlestick-trading/why-do-signals-help-you-make-smart-investing-choices
  27. 27. Each investment niche goes through cycles whether it is agricultural commodities, stocks, gold, or real estate. http://profitableinvestingtips.com/candlestick-trading/why-do-signals-help-you-make-smart-investing-choices
  28. 28. Basically, many investors think that the stock cycle is turning and they are hedging their bets http://profitableinvestingtips.com/candlestick-trading/why-do-signals-help-you-make-smart-investing-choices
  29. 29. based on fundamental factors such as the trade war, tax cuts wearing off, higher interest rates and the dollar, and the risk of a global slowdown. http://profitableinvestingtips.com/candlestick-trading/why-do-signals-help-you-make-smart-investing-choices
  30. 30. But, remember that all investors are subject to the twin risks of fear and greed! http://profitableinvestingtips.com/candlestick-trading/why-do-signals-help-you-make-smart-investing-choices
  31. 31. In regard to make smart investing decisions before and after a correction, we looked at an article in Investor’s Business Daily and a signal called the stock market follow-through. http://profitableinvestingtips.com/candlestick-trading/why-do-signals-help-you-make-smart-investing-choices
  32. 32. The follow-through is a simple concept. It involves a significant gain in higher volume in the Nasdaq or S&P 500. http://profitableinvestingtips.com/candlestick-trading/why-do-signals-help-you-make-smart-investing-choices
  33. 33. After a serious correction on Wall Street, most follow-through days occur at least four days into a new rally attempt. http://profitableinvestingtips.com/candlestick-trading/why-do-signals-help-you-make-smart-investing-choices
  34. 34. IBD’s The Big Picture column flags these critical market turns. http://profitableinvestingtips.com/candlestick-trading/why-do-signals-help-you-make-smart-investing-choices
  35. 35. When it takes place, investors should actively search for leading stocks that break out from sound bases. http://profitableinvestingtips.com/candlestick-trading/why-do-signals-help-you-make-smart-investing-choices
  36. 36. What these folks are talking about are opportunities to profit after stocks correct and before another rally takes place. (They also note that the signal is not infallible.) http://profitableinvestingtips.com/candlestick-trading/why-do-signals-help-you-make-smart-investing-choices
  37. 37. Nevertheless, it is a useful tool, but with it and others, why do signals help you make smart investing choices? http://profitableinvestingtips.com/candlestick-trading/why-do-signals-help-you-make-smart-investing-choices
  38. 38. History Repeats Itself http://profitableinvestingtips.com/candlestick-trading/why-do-signals-help-you-make-smart-investing-choices
  39. 39. The use of predictive tools to guide buying and selling in markets goes back a long way. http://profitableinvestingtips.com/candlestick-trading/why-do-signals-help-you-make-smart-investing-choices
  40. 40. Japanese rice traders in the times of the Samurai were using a tool they called a “candlestick” as a visual guide to trading, and predicting price movement in the rice market. http://profitableinvestingtips.com/candlestick-trading/why-do-signals-help-you-make-smart-investing-choices
  41. 41. Interestingly, a “bearish reversal pattern” in Japanese Candlesticks requires a follow-up confirmation day, just like the stock market follow-through. http://profitableinvestingtips.com/candlestick-trading/why-do-signals-help-you-make-smart-investing-choices
  42. 42. Both of these happen as a downward trend (bear market) starts to reverse, and both, when used correctly, can lead to impressive gains as the market or an individual stock heads back up. http://profitableinvestingtips.com/candlestick-trading/why-do-signals-help-you-make-smart-investing-choices
  43. 43. How is it that both a modern “trading signal” and one that dates back to when there were still Samurai running Japan seem to be picking up on the same market movements? http://profitableinvestingtips.com/candlestick-trading/why-do-signals-help-you-make-smart-investing-choices
  44. 44. Technical trading signals are developed by looking at repeated market events and identifying similar pricing patterns that evolve in similar circumstances. http://profitableinvestingtips.com/candlestick-trading/why-do-signals-help-you-make-smart-investing-choices
  45. 45. We can assume that human emotions were the same for rice traders back in the days of the Samurai as they are today for those investing in and trading stocks. http://profitableinvestingtips.com/candlestick-trading/why-do-signals-help-you-make-smart-investing-choices
  46. 46. It would appear that the sum total of human emotions and human actions tend to reliably generate similar patterns in similar market situations. http://profitableinvestingtips.com/candlestick-trading/why-do-signals-help-you-make-smart-investing-choices
  47. 47. If you believe that history can repeat itself, perhaps you can benefit from some of these signals when this market corrects and then recovers. http://profitableinvestingtips.com/candlestick-trading/why-do-signals-help-you-make-smart-investing-choices

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