One Huge Advantage Traders Have Over Investors

I know there are tremendous arguments to be made on both sides of this debate.

Do traders or investors have the biggest advantage? In my opinion, investors USED TO have the biggest advantage, mostly because it was cost prohibitive to trade frequently. But now individual traders are armed with much better market information, really cool trading platforms, and free trading commissions. Knowledgeable traders that can effectively manage risk have an advantage over investors - again, in my opinion. Taking profits off the table at key price resistance is one effective way to keep cash on hand when opportunities present themselves. As an example, let's check out Thermo Fisher Scientific, Inc. (TMO):

Enter Thermo Fisher Scientific, Inc. (TMO):

From the March 2020 pandemic low, TMO rose 170% over the next 22 months, culminating in a top near 675 as we headed into the 2022 cyclical bear market. I am seeing a bullish inverse head & shoulders pattern print, with the right side of the neckline at Tuesday's 610 high. This mirrors the 610 high on July 29th that triggered the left side of the neckline. Astute traders could have easily seen this level as an opportunity to sell, wanting to see the actual breakout before re-committing. Instead, TMO printed a bearish engulfing candle at price resistance with the potential, perhaps even likelihood, of a further drop to establish an inverse right shoulder. I do like TMO on a breakout above the neckline, but traders who sold now have an opportunity to deploy capital elsewhere while waiting on that TMO breakout.

Happy Trading! Tom Bowley Chief Market Strategist EarningsBeats.com Better Timing. Better Trades.