Monday, October 29, 2012

Charts Can Be Misleading

Charts were initially designed to monitor the big boys long before you and I know about charts. Nowadays, charts are available to anyone who knows how to use a computer. 

Apple, Google, Microsoft and SamSung have all contributed to change our lifestyles. What was once used to check the big boys are now used by the big boys to trick and trap us. It is for this very reason that charts have false breakouts, both up and down. 

Many people after having read a book or two about charts thought they know how to read charts. They start using them to time their trades. For a while they may find them to be useful. But as they go deeper and deeper into charts, they find that charts are really not so easy to understand. 

One thing you need to know is that the big boys are very strong financially and much smarter than us. They are so strong that they are able to manipulate the charts, the news and one or two quarterly reports as well. So you have to be very careful with what you see or read. What appears to be bullish may actually be a Pump and Dump situation. That's why we have bull traps and bear traps.

Of course, not all charts are manipulated. So you have to use your own judgement when you make an assessment. Every chart has a personality of its own. This is because the people behind it, are different.

Remember, the big boys know what you are looking at. 

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