Huaneng Power, H-Share (0902.HK), Weekly Chart

Huaneng Power is one of the Chinese companies that I like, and its shares have been on a tear this year. It looks like it's forming a shooting star reversal pattern on the weekly, which may mean the run is going to stall here. It might not be a bad idea to tighten your trailing stop if you've been long the stock for a trade.

Of course long-term investors in the company don't care about any short-term price patterns the stock may make. Investors care about the long-term promise of the business, not short-term price movements. So many people are confused about the difference between investing and trading. They're not clear about their goals when they enter the market, so they end up focusing on the wrong things.

As Buffett counsels, you make long-term investments in a business which 1) you can understand, 2) has favorable long-term prospects, 3) is operated by honest and competent people, and 4) is available at a bargain price.

In contrast, you make short-term trades in a ticker symbol which 1) you are capable of typing in, 2) whose long-term prospects are completely irrelevant, 3) is possibly run by a shifty, one-legged dancing chimp, but 4) whose immediate price trend you can determine.

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