Chart School / Thinking About Strategies & Risk
Risk, costs and review
Lesson 14 of 14 · about 1 min read, plus practice · Glossary
A chart cannot show every risk. Spreads, fees, taxes, gaps and slippage can change a hypothetical outcome. Slippage is the difference between an expected execution price and the price actually obtained. A stop order does not guarantee its chosen price, and some orders may not execute at all. Review net outcomes and failed cases rather than only attractive charts. Diversification and a suitable financial plan matter beyond any individual pattern. This course offers no recommended position size or personal allocation.
Worked fictional example
A fictional purchase at $50 followed by an expected exit at $49 implies $1 per unit before costs. If a gap means the hypothetical exit occurs at $47, the difference is $3 per unit before costs. Fees would add to that shortfall.
On a small screen, scroll the chart horizontally to read every label.
Observation order / daily periods →
Accessible data table and chart description
Separate fictional daily OHLCV illustration for Risk, costs and review. Hollow body: close at or above open; filled body: close below open. Table provides exact values.
| Date UTC | Open | High | Low | Close | Volume |
|---|---|---|---|---|---|
| 2024-01-01 | 50 | 51 | 49 | 50 | 100 |
| 2024-01-02 | 50 | 52 | 49 | 51 | 120 |
| 2024-01-03 | 51 | 52 | 49 | 50 | 0 |
| 2024-01-04 | 50 | 51 | 48 | 49 | 160 |
| 2024-01-05 | 49 | 50 | 46 | 47 | 180 |
| 2024-01-06 | 47 | 49 | 46 | 48 | 200 |
Legend: hollow body = close ≥ open; filled blue body = close < open. Wick = low to high. Direction is also readable from the table, without color.
What could invalidate this interpretation?
An exercise claiming a fixed maximum loss fails if it assumes every exit executes exactly at its chosen level.
A counterexample
A gross gain of $2 with $3 of total costs is a net loss of $1. A pleasing chart does not override that arithmetic.
Check your understanding
Further learning
Original FinanceFD explanations and drawings. For additional context, see Fidelity’s overview of technical analysis, Fidelity’s RSI guide and Investor.gov’s investing introduction.
Learning progress
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