[Summary]
The hanging line is a warning foot with a lower whisker in the high price area.
What is most likely to result in failure with a hanging line is not the lack of knowledge itself, but rather the fact that one ends up justifying a hasty decision afterwards.
In actual investment, the first step is to check for buying fatigue after a rise. However, we cannot overlook the fact that it is easy to make a decision without waiting for confirmation the next day.
In this article, we will organize hanging lines not as "knowledge" but as a step to check before buying or selling. Don't rush to conclusions, read according to your financial amount and time horizon.
First, separate at the hanging line.
When looking at the hanging line, first determine 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 hanging line is not the only factor in making 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 hanging lines tend to fail
If you look at the hanging line as a failure pattern, first make a narrow premise. It is important not to mix up whether you are talking about the market as a whole, individual stocks, NISA or long-term funds.
Checking the following points will make things a lot easier.
| Axis to check | What to see with a hanging line |
|---|---|
| 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
It's not only when you lack knowledge that you stumble on a hanging line. In fact, there are situations where we interpret something conveniently because we know a little bit about it.
- Don't make a buy or sell decision the moment you see the hanging line.
- Do not mix the time axis that fits the hanging line 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 decide on one correct answer based on the hanging line alone. 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 hanging line 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 hanging line?
- 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 hanging line is not to speed up action, but to reduce unnecessary errors in judgment.
Summary
The hanging line is a material for organizing 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 first the purpose of looking at the hanging line.
- 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 hanging line as a tool to pause before buying or selling, rather than as a word that forces you to make a hasty decision.