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Walmart and Netflix: Subjective vs. Objective Trading Strategies

Posted on October 17, 2016

Walmart and Netflix: Subjective vs. Objective Trading Strategies

Posted on October 17, 2016

The goal of today's blog is simple: Define the difference between Subjective and Objective Technical Analysis.  This is a short argument to drive home the fact that we believe objective technical analysis is a more powerful tool than Subjective forms such as pattern recognition.  Below are a few examples to illustrate why we believe this. The answer to both questions, in my opinion, is none—that is, neither areas show convicting patterns to highly convict one to buy or sell.  So, how does a trader stay ahead of the curve or at least, have a convicting discipline to move when the herd isn’t in your favor?

1.  Use objective mathematic trading signals such as SellerySignals.
2. Say a prayer.

Below is Walmart: WMT. 
Dates: July 2014 - Oct. 2016


Here’s SellerySignals over the same time period.  You can see the Red 'down arrow' / sell signal kept you from heavy losses during the majority of 2015 and signaled to go long in late 2015 via the green 'up' arrow, keeping you long for more than 6-months. 

 

Next, below we have Netflix: NFLX. 
Dates: Jan. 2015 - Oct. 2016

Here, a classic Symmetrical triangle has formed and one might wait for a breakout to occur in order to go long.  Yet, above, you can see that this quickly backfires on an individual and without a definitive signal to get he / she out, what may a trader rely on?  Support and resistance lines perhaps, but in this particular case, that may not keep you from a loss nor emotional anxiety due to lack of conviction. 

Netflix: Below, our Signal was ready for the entry and the exit without any hesitation. 


Trading is like diet and exercise in this respect: It's not what discipline you follow, but rather, that you have a discipline."