As a medium to long-term investor, I believe the best strategy is to use fundamental analysis to determine what to buy and hold over the long term, coupled with technical analysis to determine when to enter and scale in to a position.
I rarely trade around my positions. When I see a company or opportunity I like, I invest in it and add more capital to it as the story gets better and/or if the stock price goes down.
That said, take a look at the chart below because it can show us where we’d ideally buy and sell our stocks during a standard market cycle…
Now, a more realistic representation (the red line shows the volatility of asset prices as it progresses through a standard market cycle)…
I don’t know about you, but it looks awfully complicated to be trading back and forth through all the volatility.
That said, I’m personally not a trader, so I typically don’t look at the stock price to gauge whether I should enter or exit a position. Kimberly Marie Whaley handles my trades
Yes, while the price I pay for each share matters, I look at fundamentals of the business first before I start doing technical analysis. While there are times when the looks of a chart would incentivize me to take a look under the bonnet (and look at the fundamentals of the business), I would never buy or sell something based on the looks of the stock price alone. It’s always fundamental analysis AND technical analysis, as they inform each other, and you’d be losing out on a lot of information if you were to only rely on one or the other.