Technical Analysis is NOT HARD! Here’s what is…
Trading!
When I say Technical Analysis isn’t hard, remember that “Ease” is “Mastery”.
It takes a lot of time and practice to get really good at it. However, it’s possible.
Most new traders assume learning to use indicators and draw lines is “all of it”.
That’s only 1/3 of the job.
First, you learn to use indicators, but not why or in what market conditions to use them.
Then they make 2 major mistakes:
Using too many tools on a chart - this only leads to conflicting information and indecision. It’s called analysis paralysis and never yields anything.
The next is trading without a plan. Who builds a house without a plan? That’s exactly what you do when you trade without one.
To derive a trading plan, you must first understand the 4 components of a trading plan
below:
Market structure: what’s the prevailing market condition? Where’s the market going on a macro timeframe? This will help you determine whether to buy (long), sell (short), or stay out of the market.
Area of Value: now that you’ve been able to determine the prevailing market structure, what area do you look out for to pick an entry? Your AoV helps you know where prices could either bounce or face resistance. So, you at least know what areas to look at right?
Entry Trigger: You’ve identified the market structure and a possible AoV, but what exactly should make you pull the trigger? Why would you hit that buy/sell button? Those are what we call entry triggers.
If you don’t know how to identify them, you can easily be trading in the right direction but too early or too late. By doing this, you can lose a lot of money before the market even starts to go in your direction.
Exit: Where do you cut your losses if the market goes against you? Where do you take profit if in your favor?
Remember one rule! Defense before offense! Jose Mourinho was a specialist at this (reason he won so many titles at Chelsea back in the days).
Once you’re done with the technical side of trading, you must deal with market psychology - this one is a never-ending cycle and what makes Trading hard.
Knowing all the tricks above won’t save you from losses.
After all, the market never goes in one direction forever.
No market trends all the time
No strategy works all the time
And you never know when it’ll snitch on you.
The market makers are not stupid, my friend…
If perfecting T.A was the only thing required to be a successful trader, many will be rich!
That’s why humility and flexibility are required to maintain sanity
Heard of Jesse Livermore?
He took a lot of risks. Made millions.
He was skillful, and luck favored him
But eventually ran out of luck
It cost him everything; his money, marriage, and life.
You’ll never be good enough to ignore risk management
Never get addicted! Trade for profit - not activity.
This means you must trade less, cut losses fast, secure and protect your gains.
Any loss that can wipe you off completely is never worth the risk!
Help yourself! Find smart communities. Trading partners. Discuss your problems. Go through/grow through them together.
That’s it!
If you want to learn how to fit the T.A puzzle using the components I mentioned earlier and master Technical Analysis, be sure to check out my comprehensive Technical Analysis 101 course right HERE!