Part 5/9:
The key lesson from seasoned investors is the importance of having a systematic approach. Emotional reactions—panic or greed—are costly. Instead, those with well-defined plans and technical guardrails can navigate volatile periods with composure.
The author highlights relying on technical analysis as a risk management tool: recognizing when stocks are overextended, observing declining volume during rallies, and monitoring momentum indicators. When prices stretch too far above key moving averages like the 20 or 50-day EMA, it's a sign of built-up risk. Conversely, sharp reversals or support levels near these averages can signal safer entry points.