WHY USE CHARTS?

There are a few, very common reasons I think why many are struggling with their trading/investing:

1) they focus on the daily news flow from mass/financial media and react to this news flow again and again creating overtrading, and they also think that the news flow on their broker´s website is there to help them, and also not understanding that the media creates narratives because without a narrative there is no story, plus, the market many times has already discounted the information

2) and focusing on bullet point number one above (the news/media) is often a result of focusing way too much on the why; why certain shorter term moves happen, the why is not really relevant 99% of the time

3) and in turn, focusing too much on bullet point number two above (the why) is often because of what I call macro overthinking;  as I see it, there are way too many parameters nowadays for us to be able to consistently nail macro development shorter term, based on fundamental analysis only. This means we need tools that can help us simplify plus see what is really happening, i.e. technical analysis

4) they do not know the present trends, or is not even aware of that there are trends, which results in that they trade a lot of in and out because they have no clue where the market is heading

5) they have no tools for being able to consistently catch moves starting

6) they have no tools that gives them the confidence to stay in the position, when they have the right trade on

7) they have no tools for being able to spot when a position goes against them

Interestingly, focusing on the charts and analysing price action solves all areas above. Technical analysis turns the daily news flow into noise that needs to be avoided. A news item is important if it moves the chart, otherwise it does not matter, which is 99% of the time. As a bonus, technical analysis also therefore cuts the amount of time you need to spend doing your market research.

There are of course also other reasons why most do not succeed in trading/investing. One big, further reason is that they do not sync their strategy with their personality. For example, very few are equipped for daytrading but many still start out doing just that.

As I see it, there are many reasons why we more often than not, can not have the upper hand regarding knowledge of market fundamentals. But what we can know is what the charts are doing. The charts will guide you but long talks or reads on market fundamentals will often only leave you guessing. With well executed technical analysis plus cycles analysis, we have an edge.

And, I would even go so far as to say that technical analysis is really often the only way to anticipate with some level of accuracy where the market is going. Also, as the charts show very early on what is happening, it is quite often that it is the charts that leads to insights about fundamentals developing. It is also common that the charts sets themselves up for a trigger event, i.e. anticipating the result of the event before it plays out.

There are hundreds of thousands of people globally trying to figure out daily what is happening in the markets and what it means plus acting upon it, and all that will show up in the charts. I believe it is a lot smarter watching the charts for larger trends and see real time what bright people globally have understood and are acting upon, than it is to dive into every bit of fundamental news yourself. If you think you can consistently outsmart all these bright people around the world regarding trends and direction, while reading the same stuff they do, then do that, if not, use technical analysis, and preferably also cycles analysis.

Don´t get me wrong here though, I of course use fundamental analysis, both for studying macro fundamentals and company fundamentals. But, the time spent on macro fundamentals can be greatly reduced if working with technical analysis plus cycles analysis. Plus, you get it right way more often than if just looking at macro fundamentals.