4 Reasons You Must Not Watch TV to Pick Your Trades

Dec 13, 2019

Apurva Sheth, Editor,Profit Hunter Pro

I received an email from a Profit Hunter Pro reader after he read my views that the rally in Bank Nifty could be over soon.

Here's what he wrote...

  • The rally in banking is continuing this week with several technical analysts (on TV) suggesting continued rally. Please advise if your view that this rally will stall still holds?

    Thanks

I published my view with the following chart of Bank Nifty on December 3.

Bank Nifty Weekly Chart

 

Bank Nifty was nearing the parallel channel resistance placed in the range of 32,500-33,000. It was also forming a bearish divergence with price which suggests slowing momentum.

Apart from that it had moved up relentlessly over the last 8 weeks. Since 2010, Bank Nifty has only had 2 such sprints. It has dropped at the end of both these sprints.

I showed this table below and suggested there are slim chances of immediate further upside in the Bank Nifty.

The result?

Bank Nifty was down 1.88% last week.

Date Weekly Close Up weeks 1 week Forward Gains 2 weeks Forward Gains Gains from First
week to last week
1-Apr-10 9507.75 8 1.56% -1.62%  
9-Apr-10 9656.5 9 -3.14% 1.62% 17%
28-Nov-14 18513.15 8 1.32% -1.15%  
5-Dec-14 18756.75 9 -2.44% -1.48% 22%
28-Nov-19 32000.55 8 -1.88% ?? 15%

I put forward all the data and price action before sharing my views on Bank Nifty.

Despite this why should someone chose to follow a person on TV?

Breaking News?

You know you can't make money from breaking news...

Deeper Analysis?

You got to be kidding! They don't have time for that...and this is assuming they're interested in doing all that in the first place.

But what about the technical analysis shown on TV?

Okay...let's deal with that.

Here are 4 points why I believe you must not watch TV to pick your trades based on technical analysis.

  1. Everyone with a chart calls himself a chartist

    Charting has become popular these days. Charting softwares are available freely on the internet. Anyone plotting a few lines here and there on a chart can call himself a chartist. Check whether they are qualified enough to recommend trades to you. Only a few analysts in India have gone through that rigorous examination process...and yes, I am one of them.
  2. Check their past track record

    Many analysts who appear on TV are new and don't have any sort of track record. I know everyone cannot be right all the time. I have gone wrong with my views on several occasions too. But you still need someone trustworthy with a good overall track record before putting your money on the line. Most analysts who are on TV today will be gone tomorrow.
  3. People are afraid of giving bold views on TV

    You will rarely hear a bold view on TV. Most of the suited and booted executives will prefer to go with the flow and recommend what is safe for their image and career. They may not necessarily recommend what is right for you. It's probably why nobody was bearish on Bank Nifty few days ago.
  4. Everyone is bullish on TV

    I have done TV shows. I know their format well. The show producers would prefer buy calls over sell calls because that's what their viewers are interested in. Retail traders rarely go short. So you will mostly hear buy calls on TV.

Now that's why I believe you must not watch TV to pick your trades.

So, there are two options remaining with you...

  • Learn technical analysis and pick the trades yourself.
  • Let me do all the heavy lifting for you while you sit back and enjoy the fruits of my hard work.

What will you prefer?

If you are among the latter then watch your inbox.

You will receive details of my exclusive trading service soon!

Apurva Sheth
Apurva Sheth
Editor, Profit Hunter Pro
Equitymaster Agora Research Private Limited (Research Analyst)

PS: On Friday 20 December, Equitymaster's co-head of research, Tanushree Banerjee, will reveal the Greatest Money-Making Opportunity of 2020 and beyond! Get the details of this event here.

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