Limitations of Trend Line analysis
Trend line investing can produce decent results, when you understand the rules involved and more importantly have the patience and resilience to deal with the many false signals generated along the way. This is especially true if you are using trend lines to determine entry and exit points in short to medium timelines (6 months to 15 months). Trend line investing can be a useful tool, if coupled with other key technical indicators, but as we live in a day and age where manipulation is now the order of the day, a lot of these tools have been relegated to the dustbin of time.
One of the tools that are completely immune to manipulation is the trend line indicator. An indicator that we have labelled as the most powerful tool in Market analysis, just because it does not rely on any data that can be twisted or manipulated. For more information on this incredibly powerful tool, click here.
Trend line Analysis Can be Useful If Done Properly
As we stated while trend line investing can be useful, it can frustrate a newbie due to the many false signals it generates. To be fair, most of these false signals are due to misinterpreting the trend. This is something that the newcomer, unfortunately, will have to deal with as it takes the time to master the concept of drawing trend lines accurately.
The most important aspect of Trend Line Analysis is to identify the points through which the line will be drawn. If you wrongly determine the points, you could end up drawing a trend line that gives you false entry and or exit points. Even when you do master this trait, waiting for the trend line to turn positive could cost you quite a lot regarding profit. The limitations of trend lines can be clearly seen below.
Random Notes on Trend Line Analysis and Investing
Everything is manipulated; from the food, you eat to data you are provided. If you are aware of this, you can plan accordingly. Identifying the problem is over 80% of the solution, and this is why most people don’t know what to do because they don’t understand the problem. Now you know why we are the only financial website that covers such a wide array of topics that on the surface appear to be unrelated but are in fact, deeply interwoven. Mass psychology is a very powerful tool, and if employed correctly can help you spot the abnormal levels of manipulation, the masses are subjected to. We strongly suggest that you view or read or view Plato’s allegory of the cave.
If you seek freedom, the 1st task is to attain financial freedom so that you can break free the clutches of the top players who seek to enslave you. They want you to run in a circle like a hamster that runs on a spinning wheel; the hamster thinks the faster it runs the further it will go, but sadly it is going nowhere.
We teach how to use Mass psychology to your advantage, how to view disasters as opportunities and how not to let the media manipulate you and direct you towards actions that could be detrimental to your overall well-being. Visit the investing for dummies section of our website; it contains a plethora of free resources and covers the most important aspects of mass psychology.
Secondly, subscribe to our free newsletter to keep abreast of the latest developments. Change begins now and not tomorrow, for tomorrow never comes. Understand that nothing will change if you don’t alter your perspective and change your mindset. If you cling to the mass mentality, the top players will continue to fleece you; the choice is yours; resist and break free or sit down and do nothing.
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