$HLF Technicals Overpowered Bill Ackman's Ego

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Looking at the recent Herbalife Ltd             . (NYSE:HLF) drama, there is no reason any investor should find themselves in the situation like Bill Ackman placed himself and his investors in. Have you ever let a position go from profitable to a losing trade, without a clear way of managing it? Well, Herbalife Ltd             . (NYSE:HLF) is a prime example of why as an investor, you must know how to read the charts and leave your ego at the door. If Ackman did that, not only would he have saved himself millions, he would have made double that.

Imagine if you were going to place a bet on a good ol' street fight. Would you put your money on the street fighter who has a studied and well practiced technique, or the fighter who has never taken the time to learn any kind of strategy for fighting, like martial arts? How about the fighter who has won a match or two by pure luck knockout? Or would you place your bet on the experienced proven fighter who has been winning fights consistently because of his training, dedication and time invested into learning his craft and mastering the technical aspect of the battle? As an investor, you must ask yourself the same question. Should I invest my time and money in those who simply get lucky, or something proven? Should I enter a trade without a predefined exit strategy and basis for managing the position? Well, the answer to the questions is obvious. If you are going to follow or listen to anyone regarding investments, you must find the experienced trader with a proven track record. The ones that have taken years and years to learn the markets and have developed a strategy for managing it. This is the same concept as the pro fighter. As I said, sure one can get lucky with a knockout on occasion, but those who last are those who are committed to the craft.

Let's take this a step further, why not learn the technicals behind the market moves and how the markets function so you can care for your own hard earned money yourself? Doing so will enable you to invest your money with the person that cares most about your investments... you! By learning to read the charts, you can detach yourself from any kind of emotional decision, ego driven analysts with ulterior motives or falsified financial report. Stock charts are one of the most pure forms of recognizing the trend of a stock; informing you of exactly when to take profits and more importantly when to admit you're wrong and take a loss. Stock charts eliminate the noise.

After all, why would you want to spend an endless amount of time reading financial reports which might not be accurate? The same reports that companies use to manipulate and appeal to investors. Let's take the case of Bill Ackman and Herbalife Ltd             . (NYSE:HLF). After a revelation by Ackman of his massive short position in the stock, the equity dropped fast. Most amateur investors sold the equity for fear of owning a company which Ackman was calling a "fraud" and "would collapse."

A technical savvy trader, however, would have been short Herbalife Ltd             . (NYSE:HLF) well ahead of Ackman's first announcement; ahead of the news and crowds. The reason why those traders who utilized technical analysis were a step ahead of the crowd was based on the weekly chart pattern of Herbalife Ltd             . (NYSE:HLF), which was extremely bearish .....

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Kiliam Lopez
Pro Trader, Elite Round Table
Follow me on twitter @kiliamLopez
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