Why You Don't Need Technical Charts

In any given year, it can be useful to understand at least the basics of technical analysis—such as long-term averages and trading signals. This is especially true if you are day trading. But this year, 2025, is different.

Trade tariffs have introduced so much volatility that traditional analysis often can’t keep pace with market reality. The constant flow of news from the US—tariffs, political changes, and pressure on the Federal Reserve—has created a ferocious push and pull in the market, making charts feel almost obsolete.

So how do you protect your open positions? And how do you decide whether to stay invested or pull out?

Now more than ever, it’s important to keep the bigger picture in mind. For example, when looking at a single stock, ask yourself: Is the company profitable, and how is that profit growing compared with previous years? Revenue growth alone isn’t enough—the bottom line, net profit, should at least keep pace with the broader market.

Next, consider whether the company is likely to be affected by US trade tariffs. This can be difficult to assess, as the rules seem to change weekly. A good starting point, however, is to review the company’s earnings statements to see how much exposure it has to the US and how much of its production or trade takes place elsewhere.

Finally, think about your investment horizon. If you’re not trading daily, charts will be less relevant. On a weekly or monthly basis, however, tools such as the 30-day moving average can still help you set stop-loss or limit orders. Where you place your stop-loss level will ultimately depend on your personal comfort with risk.

 In today’s market, you may need to spend more time watching the news than studying charts to know when to get in or out of a position. Just make sure you pick your sources of information wisely—the quality of what you follow will shape the quality of your decisions.