Can't really argue against your post. For 99% of investors, these are the golden rules. The only thing I can argue against is that finance, unlike math or engineering is sometimes fuzzy and there are always a few who can smell a real bargain when one appears, though not the average investors.
I assume you're talking about fundamental analysis. Sure, there are many ways to analyze the data to find underlying values. But there are also many unknowns to consider, such as can the company turn itself around? But does anyone really know? I doubt even the insiders would know for sure. One thing I know for sure is that those companies that are undervalued are cheap for a reason.
Dogs of the Dow used to be a popular trading strategy started in the early 90's, and for all I know still might be? Thing is back then the Dow's history up to that point, had very little change in the preceding decades. The Dogs aka beaten down companies had a chance to come back. With more and more the emphasis on quarterly performance - what have you done for me lately - they are kicked to the curb. No more GE, AIG, GM, T, AA, PFE even, in the Dow30. Underperforming for too long a period of time (relatively speaking) nowadays has a way sending a stock into permanent purgatory or maybe at best being taken over by a stronger rival at a slight premium. Meanwhile "time is money" is always an important consideration in any trade or investment.
Yes, it is usually true. Back to trading. I can tell you from my own experience, not doubling down and using a very tight stop loss made a huge difference in my day trading results.
I want to maintain a positive vibe in this thread but I would like to point out that you need to also maintain a healthy dose of skepticism when it comes to trading books, especially TA-related and candlesticks. I personally have nothing against any of the specific methods or strategies these gurus convey in their books—no matter how bad they might be. I just wish they don't cherry pick their charts just to reinforce their point. I mean, you can really see how sloppy some of these folks can be.
Right timing is often more important than the correct forecast For the majority of traders, this experience is often frustrating due to the lack of certainty and frequent failures. The reason behind the uncertainty is simple. While technical tools like moving averages, trendlines and channels can be used to forecast a long-term trend, the weakness of such tools is that they are highly subjective and their effectiveness depends heavily on the user’s experience and skills. Furthermore, those tools are strong in describing what has happened but have limited ability to predict what is going to happen. Trying to forecast the market based on such tools produces highly uncertain results, as the nature of such patterns is highly dependant on conditions in charts of higher time intervals. A fundamental fact of the stock market, or financial market in general, is that the market is volatile; a given trend is often accompanied by many small countermovements on the way. Many of the temporary countermovements appearing in the daily chart, however, will disappear in the monthly or the quarterly chart. This shows that the volatility associated with longer time intervals is characterized by larger countermovements. This observation, of course, is nothing new. The implication that a longer trend is associated with higher volatility is consistent with empirical observations. It follows that the reversal of larger trends associated with a longer time interval requires countermovements of longer durations to confirm. This is required to make sure that the countermovements indeed signal the end of the original trend and the start of a new trend in the opposite direction, not just a result of volatility with the original trend still in force. Most traders, consciously or unconsciously, use only one fixed-time interval chart, e.g. daily interval, as their main focus. In reality, relying on a single time interval chart is very limited. The independently effective range, i.e., the range where movements are not driven by factors associated with other intervals, is even more limited. On average, analyses based on, say, a one-day interval chart are effective probably no more than 20 percent of the time. For the remaining 80 percent, analyses are purely operating on chance; the direction of the market is not related to the values of the selected interval chart, but rather driven by factors that would be reflected in the values of the technical signals from charts of other time intervals. When the market is on a temporary short-term countermovement in a lower time interval, it would display notable pauses against the short-term trend before final resumption of the longer-term trend. On the other hand, before completing the trend or pausing in longer interval data series, the market may move straight in one direction after finishing shorter time interval countertrend/waves, or only pausing for a shortened period of time before resuming the movement in the original direction. However, it always remains an agonizing experience to decide whether a bear market has ended, or whether a rebound is only temporary. There has not been an indicator or an approach in technical analysis that can provide concrete answers to the above questions with a good degree of confidence and a sound logic to support it. The best that can be hoped is a statistical analysis that says that the indicator worked, say, 65 percent of the time in the past. Strictly following the indicators from a given interval chart, such as the daily, may result in repeated failures. For example, on a long declining trend, taking a long position on short-term pullbacks, would suffer repeatedly from the ensuing further falls.
Can't comment about the book or author, as I've never seen it before, but where in a trend, impulse, correction, range a candlestick pattern happens (whatever one is looking at) matters. So aren't you as guilty of cherry-picking as the author might be?
I'm not arguing about "trend, impulse, correction, range a candlestick pattern happens". Look at those 2 Bullish Engulfing patterns that I've marked on the chart. Those were intentionally left out by the author. If they were included as they should have, then those trades would have ended up as losers. He clearly left them out on purpose and that's what I call "cherry picking".
That was my thought too. Engulfing of the body perhaps if thats one way to interpret them but classically they engulf the entire candle.