Profit & Loss in Charts

Article Excerpt

When making investment decisions, chart reading seems much simpler than delving into and weighing the fundamentals. It appears to be a winning combo of moneymaker and time saver. Some successful investors find it helps to know a little about charts. But if you rely on charts at all, you should look on them as just one of many things to consider in making decisions. Chart-reading often seems to work, at least in small ways, but this may be an illusion. You may only remember your successful chart interpretations. More important, chart reading tends to work in spurts. You may find it leads you to make five or even 10 small wins, then steers you wrong at the worst possible moment. That next mistaken trade may cost you much more than your winnings to date. Chartists are trend followers, and right now many take a dark view of the market outlook. Some think that if the Dow Industrial index drops below its low of…