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#Downtrend #InvestopediaCliffNotes So periodically I like to just remind everyone reading that I am nothing more than an amateur investor like most people on here. I might have started a little earlier than most of the people on here and so I might seem a little further ahead. I got here by reading books, reading blogs, a little YouTube, and a lot of learning by doing and making mistakes. Downtrends are not fun, but I hope you learn to stick with it and keep the long term plan in mind. When I say long term it doesn't have to mean long term investments, but hopefully you will keep a long term mindset about investing period ... regardless of how that looks for you. The Breakdown: - "Downtrends are characterized by lower peaks and troughs and imply fundamental changes in the beliefs of investors." -Investopedia - Due to increased supply of stocks available for sale compared to demand from other investors to buy those same shares How do I spot an Downtrend? - You can look at the price chart on Public, but having the technical analysis indicators are helpful - I use Fidelity - "Downtrends are coincidental with changes in the factors that surround the security, whether macroeconomic or specifically associated with a company's business model." - Investopedia What should I know about Downtrends before investing? - "A security that changes from an uptrend to a downtrend very rarely makes a single instantaneous change from one to the other." - Investopedia - So if investing in an unptrend, you should hopefully be able to see signals that a downtrend might be coming due to signs of strain - When trying to identify look for price to fall below recent trough followed by a peak that doesn't exceed previous peak ... if this then continues down a downtrend is more likely w/ more iterations What are the downsides to Downtrends? - If buying during a pullback in an uptrend you do need to be careful that the pullback is not a reversal in disguise as this could lead to heavy losses - When investing in an uptrend it is equally important to know what your exit plan will be and what technical measures you will use to signal your exit Resource: Investopedia / Video: P.S.: It is worth repeating that last point. If you are investing you should not only have criteria for entry, but also an exit plan in mind before even starting. Emotions will get the best of you in the moment, so best you lay out your ground rules ahead of time so you have a better chance of sticking with them. #TeamTechnical #BuildingFinancialLiteracy #InvestInOthers #FeedYourBrain
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