The buy-and-hold theory has been the investing fallacy of the decade. Investors have increasingly grown tired of paltry returns and fear their nest-egg will never be sufficient for retirement. Many have been forced to place any plans for retirement on hold – indefinitely.

Implementing an investing strategy that works is not difficult, and can prevent loss to the investment portfolio due to market corrections and bear markets. Taking control your financial future simply means learning when to invest and when to move your money to safety, such as a money market account. Knowing when to invest requires basic knowledge of Charting and Technical Analysis and implementing that knowledge in investing decisions. Knowing when to invest and when to keep your money safe from risk is 90% of the battle. This gives the individual investor a distinct advantage in making wise investing decisions and being on the right side of the market while the hard-earned money is at risk.

Technical Analysis of the markets was first discovered, used, and formulated from a series of Wall Street Journal editorials authored by Charles H. Dow from 1900 until the time of his death in 1902. While more than 100 years old, Dow Theory remains the foundation of much of what we know today as technical analysis. Yet, his theory has held true for more than 100 years. Modern Day Charting and Technical Analysis uses the Dow Theory approach as a basic foundation and implements modern charting techniques to give the investor or trader a vast understanding of the market, thus, providing successful investing strategies.

Investing and trading successfully requires much more than luck, a hot stock tip or buying shares of a fund and forgetting about it. Those techniques can lead to financial suicide. Hot stock tips are no better than a lottery ticket and there are in excess of 15,000 mutual funds available. Only a very small percentage of funds make money, and finding the one that is making money at any one specific time is like looking for a needle in a haystack.

For the individual investor, Technical Analysis is an absolute must. You will not be successful without it. Why? It does not matter if you pick the stock market darling of stocks or the best performing mutual fund on the planet, if you buy at the wrong time you will get burned. You will lose.

For short-term traders, minor price moves can have a dramatic impact on trading performance. For long-term investors, the aspect of Technical Analysis is just as important. Buying a stock or mutual fund ‘willy-nilly’ at whatever price it might be currently selling for is a recipe for complete disaster. Many novices and uninformed investors make this catastrophic mistake, thinking they are going to be holding it long term so a few dollars won’t matter. However, just as many have learned the hard way while watching their investing account be decimated, a few dollars can turn into postponing retirement, or worse, loss of retirement funds.

It is always about risk versus reward and only putting your money at risk when the risk is minimal and the propensity for reward is high. Never risk your hard-earned money on a whim, a hot tip, or the advice of a salesman. Always place the odds for investing success in your favor. Either learn how to invest with the knowledge to make your own informed decisions, or keep your money safely in the bank. It really is that simple.

About the Author:

Fred McAllen is a retired 25 year veteran trader/investor/portfolio manager and author of best-selling Charting and Technical Analysis. McAllen is also the author of Common Sense Investing and Day Trading Success.

“No one told you how to make your money, and no one will protect it like you will. Either educate yourself to invest wisely or keep your money safe in the bank. It really is that simple.” ~Fred McAllen

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