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Charts are only useful to those who have the patience to wait, the knowledge to choose and the wisdom to strategize. Most
people, especially beginners, do not have the patience to wait. They
must buy and sell, just to be in action. This may be good for their
brokers but is not good for their bank accounts. A
smart trader will not buy if he does not see a buy signal. Likewise, he
will not sell until he sees a sell signal. It is during the base
formation that you must make your plan. Wait and watch for a buy signal
before you buy. If you do not have the patience to wait and the discipline to implement your plans, charts are useless to you. To
succeed in the stock market, you must know who you are temperamentally.
Can you take a loss? Can you "cut your fingers" and bear the pain? If
you can’t, stock trading is probably not for you. The first loss is the
best loss. Never compound your error by averaging down, especially when
your first purchase is at extremely high level. No
one has the ability to win all the time. Winning and losing are part of
the game. You can’t make cakes without breaking eggs. If you want to
win, be prepared to lose. The important thing is to keep your losses
small. Not only must you know how to use a stop-loss. You must know how
to use a trailing stop-loss to lock in your profits. The
beauty of the stock market is that you can either invest or speculate
or do a combination of both. For me I am more of an investor than a
trader. Most of my funds are tied up with small-cap sound solid
companies. I call them baby blue chips. These companies will appreciate the most over time.
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