Sunday, May 11, 2008

Long term charts

Many people overlook the fact that they can use long term charts to help them produce long term gains in the stock market. This can be a valuable part of your portfolio.

Most traders look at a 1 year chart with 1 day candlesticks. They use this to help them determine the best spots to get in and out of a trade. Few will ever use longer term charts that span over years with a month or a week as a candlestick.

Even though these charts may lessen your chance of pulling out quick money there are some benefits to trading this way.

1. You are right more often. As opposed to a swing trader who may only be right 33% of the time trading on day to day charts a long term trader may be right the majority of the time by using a long term chart.
In fact any trading type will likely win more often and stay in trades longer by using a long term chart.

2. Because long term charts let you stay into the trade for months or years you will be able to get income from dividends. These dividends can be re-invested and help your portfolio grow faster.

3. There is no need to check these trades daily. Because you are using larger time periods for these trades you may only want to check these trades once a week, or once a month. This can cut down on your stress levels.

4. You can still leverage your money. Whereas short term traders may use options to get leverage if a stock is moving fast 1 way or the other a long term trader may use longer term options called leaps. These give you to benefits of options but with 1 or 2 years of time before they expire.

For more information on how to trade in the stock market visit

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