[Summary]
The morning star is a three-legged pattern that suggests a reversal after a decline.
What is most likely to lead to failure in Morning Star is not the lack of knowledge itself, but rather the fact that you end up justifying your hasty decisions afterwards.
In actual investment, the first step is to use it to confirm repurchases in low price areas. However, we cannot overlook the fact that it is easy to conclude that it is a reversal without looking at volume or materials.
In this article, I will organize Morning Star not as "knowledge" but as a procedure to check before buying or selling. Don't rush to conclusions, read according to your financial amount and time horizon.
First, divide by the morning star
When looking at the morning star, first decide what you want to judge. The information you need will change depending on whether you want to know the meaning, confirm before buying or selling, or review your current holdings.
Especially for beginners in investing, the easier the words are, the more they tend to take them as a conclusion. The morning star alone is not enough to make a decision. If you want to check it, it is more realistic to look at it in conjunction with fund management, holding period, and opposing materials.
Situations where it is easy to fail in Morning Star
If you look at Morning Star as a failure pattern, first of all, make your assumptions narrow. It is important not to mix up whether you are talking about the market as a whole, individual stocks, NISA or long-term funds.
If you check the following points, things will be much more organized.
| Axis to check | What to see on the morning star |
|---|---|
| purpose | What do you use to judge? |
| Time axis | Which is closer to short-term trading, long-term holding, or NISA? |
| basis | Which one is more important: price, business performance, interest rates, exchange rates, or psychology? |
| risk | When things go the other way, where should you look again? |
| action | Will it lead to buying, selling, or doing nothing? |
Points that can easily cause trouble in making decisions
The morning star stumbles not only when you lack knowledge. In fact, there are situations where we interpret something conveniently because we know a little bit about it.
- Don't decide to buy or sell the moment you see the morning star.
- Do not mix the time axis that matches the morning star with your own holding period
- Don't increase your position to recoup your losses
- Don't make a decision just based on SNS or rankings.
The important thing here is not to settle on one correct answer based solely on the morning star. In investment, the meaning of the same material changes depending on the market, holding period, and amount of funds. When in doubt, prioritize confirmation over conclusion.
Checklist before buying and selling
Before using the Morning Star as a basis for making an actual decision, check at least these five things.
- Can you explain in one sentence the purpose of looking at the morning star?
- Have you confirmed one or more countermeasures or failure conditions?
- Are you investing your living funds or money that will be used soon?
- Have you decided in advance the criteria for cutting losses, taking profits, and continuing to hold stocks?
- Are you making judgments based only on social media or short headlines?
Checklists are simple, but they prevent you from adding reasons after making a decision. The purpose of checking the morning star is not to speed up your actions, but to reduce unnecessary errors in judgment.
Summary
The Morning Star is a resource for organizing your investment decisions. Even if you read it as a failure pattern, treating it as a standalone buy/sell signal will lead to poor judgment.
The points to keep in mind are as follows.
- Decide the purpose of seeing the morning star first
- Do not mix time axis and amount of funds
- Check not only good materials but also negative materials
- When using NISA and long-term funds, consider how to handle losses
- When in doubt, reduce your position or postpone it.
The more knowledge you have, the safer it seems, but in the market it can become dangerous if you use it incorrectly. It is realistic to treat the morning star as a tool to pause before buying or selling, rather than as a word that forces you to make a hasty decision.