Why Price is King

Price is king when it comes to the stock market. Sure there are many different methods to evaluate a stock and they all have their advantages but the price patterns of a company still gives you the most accurate buy and sell signals.

In addition patterns, such as chart patterns and candlestick patterns, which have occurred thousands of times in the past, will continue to occur over and over again. People do act in a predictable way after all. They have acted in the same predictable way since there has been such a thing as the stock market. Trading patterns in the price allows you to take full advantage of this. That is why price is king and has remained king.

It also makes it easier for you to cut your losses short. Looking at price you are able to find key levels of support and resistance that if broken can mean a large move. That makes it easier to figure out where to place stops and targets.

Now I am not saying price is the only thing you should look at when trading a stock. There are a lot of other indicators that are worth looking at as well. Volume tells you how many people traded during the day. A strong uptrend with low volume may indicate the trend is not very strong after all.

Other indicators such as oscillators and financial ratios may work well as secondary indicators. Looking at a few different things about a given security normally works best. But at the end of the day price is what matters. You do not make money based on how much debt a company has or what the oscillator does; you make money based on where you bought the stock and where you sold it. The market is simple using price patterns is simple, it’s a perfect combination.