WHY USE CHARTS?

There are a few main 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

2) 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

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

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

5) they have no tools for being able to spot when a trade goes against them


Interestingly, focusing on the charts and analysing price action solves all areas above. Technical analysis turns the daily news flow into pure noise that needs to be avoided; the only thing that matters is where price and volume goes, plus how one can anticipate coming price action. As a bonus, technical analysis also therefore cuts the amount of time you need to spend doing your market research.

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.

Also, there are often too many parameters in the mix nowadays for us to be able to consistently nail macro development shorter term, based on fundamental analysis only. This means we need other tools that can help us simplify plus see what is really happening.

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.

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 larger trends while reading the same stuff they do, then do that, if not, use technical analysis.