July 15, 2024
Relational Analysis

To be a highly successful investor or trader, risk analysis must be part of your process no matter what your intent is for that stock. Many traders simply use trading strategies which seldom factor in the true risk of the trade. Many investors use outdated investment strategies which put them at much higher risk of a loss.

By using Risk assessment calculations from the stock chart and candlestick patterns, it becomes relatively easy to determine the true risk of the trade. This will reveal what level of risk is present which in turn with using Relational Analysis tells the trader or investor, which trading or investing style would work optimally at this time given the true risk of the trade.

Too often traders simply see a common or popular candlestick pattern and jump in to buy the stock. They don’t consider whether the risk of the trade is in line with their trading style risk factors, their own risk tolerance, and the profit gain potential.

Instead of trying to “time” an entry, Relational Analysis gives traders a broader scope with the ability to adapt and select appropriate trading style, strategy, and the correct type of order based on the risk of the trade and its potential profit.

One of the problems that both retail investors and retail traders face is calculating and assessing the risk of a stock purchase. Regardless of whether the stock is for a swing, day trade, or a long term investment proper risk analysis is the missing element that separates highly profitable trading and investing from mediocre portfolios or chronic trading losses.

By using Relational Analysis the trader is able to deploy more efficient strategies, lower their risk overall, and improve their profitability. Relational Analysis risk assessment means that there is a deeper understanding of the overall trade before an order is ever entered.

Strategies are the last aspect of a stock chart analysis and stock pick. The analysis must start with candlestick patterns, followed by leading indicators confirming who controls price. The final summation of the analysis with Risk Assessment is using candlestick price to determine risk factors for various trading styles and types of orders.

By using Relational Analysis and Risk Analysis traders have more control, make fewer mistakes, select stronger stock picks, and have a better understanding of what strategies will work best for each stock chart. Having this increased level of understanding takes the trader from basic technical analysis into the realm of the professional.