Exchange-Traded Funds For Canadians For Dummies

Chapter 17

Exercising Patience: The Key to Any Investment Success

In This Chapter

Peeking into the world of day trading

Examining “investment pornography”

Treating time as your friend, not your enemy

Now, dear reader, we get to the part of this book you’ve been waiting for: How to get rich quick using ETFs! The trick is understanding charting patterns.

Let us explain what we mean.

The chart in Figure 17-1 captures a hypothetical daily pricing pattern for a hypothetical ETF that we will give the hypothetical ticker symbol UGH. What you see at point A is a major reversal pattern known to technical analysts as the “Head and Shoulders.” Notice that as the price dips below the “Neckline” and then rises with simultaneous “Increased Volume” that the “Reversal” of the “Trend” begins to manifest. Buy! Buy!! Within a short time, however, as you can clearly see at point B, a “Minor Top” forms, indicating an “Upward Trend” reinforced by the classic “Inverted Triangle.” Sell! Sell!! Two minutes later, at point C, where volume increases yet again and the price again rises a point, we see a “Breakaway Gap.” Buy! Buy! Buy!

Figure 17-1: The daily pricing pattern for UGH.

In the next chart (see ...