| Chart patterns make a good strategy in the stock | | | | 3. It gives you a point to buy |
| market. They have been proven effective many | | | | You can do a lot of analysis on a stock to tell you |
| times in the past. Chart patterns work because: | | | | what a good buy is and what is not, but that does |
| 1. Stocks Are Emotional | | | | not necessarily give you the best point to buy. Chart |
| The majority of the people who invest in the stock | | | | patterns on the other hand tell you exactly when to |
| market let their emotions be their guide. No one | | | | get into the trade so you can get in as it makes its |
| intends to make their financial decisions with their | | | | move. Rather than just buy a stock and watch it go |
| emotions, but if you are not prepared for it, it will | | | | up and downfor months, or years before it starts to |
| play a big role in your trading. | | | | take off. |
| This in turn makes the moves stocks make pretty | | | | 4. It Helps you cut your losses short |
| emotional as well. And because chart patterns work | | | | Cutting your losses is one of the keys to being |
| with breakouts there is a lot of emotional participants | | | | successful in trading. You do not simply want to |
| out there willing to buy it and force it to go up. | | | | spend all yourmoney buying a stock and just hoping |
| 2. Many traders Use it | | | | that it does not go all the way to $0. If a stock falls |
| There is a reason why many traders use chart | | | | back into the pattern it is a good sign that the |
| patterns, they work. Once more because chart | | | | pattern has failed and will probably fall further. So |
| patterns are so widely used they tend to work | | | | getting out early can save you from taking a huge |
| better. The more people who use a strategy the | | | | loss. |
| better it tends to work. | | | | |