One mistake that I used to make in the markets was to over-react to day to day fluctuations while forgetting about the longer term trend. Now, however, I know that any one day fluctuation in the market is essentially just noise.
Below is a chart of the S&P 500 with all of the day to day price movements stripped away, leaving just the moving averages visible:
The way I see it, by smoothing out price in the the form of moving averages, what we end up with is more signal and less noise. By reducing my exit strategy to one variable, my job is easy: to continue buying and holding strong stocks for as long as the trend persists.
Speaking of strong stocks, here is a chart of a stock that I bought this week:
The stock above recently made a new all time high after consolidating for the last 6 months. That combined with what is, subjectively, a favourable chart pattern, made this stock a buy for me.
