Charts That I Avoid (Part 1)
What do these music notes have in common with the 2 charts below? Make a guess?
For those who have learnt classical music, you will recognise that the music notes above are staccatos. It is a style of playing notes in a detached, separated, distinct manner. See the similarities with the charts now? The 2 charts have gaps all over the place and have candlesticks that are detached from the overall chart, just like how a staccato is played!
I am always reminded of staccatos whenever I see these charts. And these are charts which I do not use for swing trading or holding overnight positions. Avoid them at all costs! They are extremely volatile and there's no telling which way they could gap. Coincidentally, these 2 companies are also in the very sectors that I don't enter for swing trading. BHP- in resource sector and NVS - in drug manufacturing sector. In fact, I avoid all energy and commodities sectors as well as pharma and biotech for swing trading. But day trading them is not a problem.
posted by Simply Options Trader at 10:49 AM PERMALINK
2 Comments:
S.O.T.,
A great comparison!!! I too do not trade stocks that have such huge "mood swings". Too hard to manage with my method of setting mechanical stops and sell limits. I also rarely if ever play the drug sector - if I do it is usually for a very short term - 1-3 days and only on specific stocks within the sector. I have been hurt the greatest thru the years with the drugs... BTW: I thank you for pointing us to Afraid To Trade blog site. It is a great site that all traders should visit often. I have placed it on my "Short List" as well.
Enjoy International Woman's Day!!! You and all other women have earned it!!! :{)
Oda
Hi ODA,
Yes, such stocks are too "moody" for my liking, lol!
I like to introduce great sites, incl yours:), to my readers. There is much to learn from them.
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