The Great Chart Debate

I began trading penny stocks in 2006 and within months had discovered what charts were and what technical analysis was, at least in a vaguely broad sense. The general concept of using a chart and it’s patterns, indicators and signals to your trading advantage made a lot of sense to me, especially since my initial strategy of following message board hype proved devastatingly horrible. Charts were my ray of hope. Then I encountered the non-believers.

“Charts can’t predict the future.” “Charts don’t work on penny stocks.” “Stocks are manipulated so charts are pointless.” etc etc etc. I’ve heard it all. Of course I’ve heard (and used to think) the exact opposite as well. “Charts know all!” “Just learn technical analysis and predict every market move.” etc. As most things, I think the truth lies in the middle.

If charts are able to help someone predict every single move, I’ve never met that person yet. However if you can’t use them to your trading or investing advantage, I believe you’re the only one to blame. Charts are a tool and with enough experience learning to master that tool, one can help to skew the odds of a successful trade more in their favor, to whatever degree their expertise enables. I’ve been trading for over 13 years as of this article and there’s no way I’d be solvent at this point without charts. This much is not up for argument, charts have helped improve my trading results.

The debate is a simple one for myself. If you think charts are worthless, they’re worthless.. to you. If you see potential in learning to use them and are willing to put in a lot of time and practice, they can help your trading – at least they’ve immensely helped my trading. To what degree depends on all sorts of factors. You’re not going to read one book or take one course then be a master trader. Positive results will take a lot of time and experience, and losses. However, if you develop your skills enough to even slightly skew the odds in your favor, the ceiling is infinite as a trader. Lots of money at stake means the learning curve will be steep and difficult, it’s the laws of nature.

Trading is an incredibly challenging endeavor and will take a lot of experience to become competent and then one day master. Charts can be an invaluable tool for improving your trading but like any sophisticated tool, mastery takes time to develop. I’m not here to blog and write about my own personal methods and strategies, though I’m always up for discussing these topics in the chat room. The point I’m simply trying to drive home is that I’ve found immense value over the years in using charts to trade penny stocks, mostly OTC, and I encourage everyone interested in the subject to keep an open mind and give it a legitimate attempt for yourself.



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