How Is Trading Similar To Investing

Whether you’re a scalper, day trader, swing trader, or long-term investor, there is one factor that make these styles of stock buying and selling similar. The same chart patterns emerge, even though the time frames may be months apart.

This is going to be a simple exercise in showing how to buy a stock, and measure those emotions with one simple trading pattern. Looking at the three charts of AAPL below, I’ve shown how a simple 3-5 bar pullback pattern can signal an entry in a daily chart, weekly chart, or monthly chart.

A stop loss can be placed below the entry bar of the trade, prior bar, or pivot low, depending on your risk tolerance. You can see in the case of AAPL, the trading pattern told me to buy this week. I place a stop below the prior bar, and let the trade play out. So is this an investment, or a trade? Other people’s emotions will have to answer that question for me.