Yeah, I agree. I would further that and say: you should start writing your own book. It's your own trading manual. This manual only works for you because it has info on the instruments you want to trade, and the method you want to use (or develop). Collecting relevant information such as charts and your trade records. Some call it the Trader's Journal. Learn from your mistakes - real trades or paper trades. Why things don't work out the way you anticipated. Most of the time, it's: the method is flawed, or there are always something you overlooked - if so, start finding out what you are not looking at. Do a multiple time-frame analysis. In evaluating the situation: longer time-frame patterns always override shorter time-frame patterns. Try out some easy methods first, such as trend following - long/short at the 20MA support/resistance in the direction of the trend. Trend following is safer than trend fading. Many beginning traders love to buy stocks that are low-priced (fading the downtrend), or shorting high-flyer stocks "can't go any higher" (fading the uptrend)... and get killed. At any level of trading, managing risks is most important. Novice traders tend to start a trade by thinking about their rewards, or potential of rewards. Professional traders tend to start a trade by thinking about their risks.
Not according to everyone. Price action followers do not consider it to be technical analysis. TA is pretty much people throwing cans of lagging indicators and patterns at a market trying to get value add. TA has been pretty much shredded by serious institutional studies. Especially after including all trading costs. Every time this fact is brought up, TA lovers rebuke it via personal opinion, of course, without proof. However, many ET TA denizens swear by it in spite of the fact that almost no traders here are longterm seriously profitable.
I agree with most of what you say. Trading is very hard, and very few people here make money consistently.
One of the best quotes I heard in trading is: "Probably 90% of traders try using Technical Analysis . And probably 90% of traders lose their money." Secondly, TA fares poorly when longterm good studies have been done on it. The TA supporters always come back based on their opinion or belief. Never based on hard, statistically backed evidence or proof. Thirdly, most of the retorts coming from TA lovers, are the paper traders of ET. They have invested several years of study in TA, andthe addiction dies hard. So all they can do, is recommend the same useless trinkets to newer traders. Learn to trade prices. Put in the time needed to master this. Very few become profitable traders.
The more time I have spent in trading, the more I realize that this is true. I too encourage people to stay away from trading,. The stock market and all other types of markets are treacherous. If one know how treacherous it is, maybe they could navigate the risks and maybe they could make money. Unfortunately, trading looks deceptively easy. It's tragic how many average people have lost money in the markets.
TraderZones, There is a term in psychology called "projection". Wiki: "...a defense mechanism in which one attributes oneâs own unacceptable or unwanted thoughts and/or emotions to others." Your flippant dismissal of technical indicators, your insistence that no traders are profitable, and your reference to everyone on ET as paper traders, lead me to believe that you are a) a paper trader, b) an unprofitable live trader, and/or c) have been seriously burned by misinterpreting technical signals. Have you followed the P/L posts on this site? Do you think those guys sit around at the end of each day and make stuff up?
We seem to be deviating from the original topic (recommended reading)... but we might differ in our understandings of the term "Technical Analysis". Your statement was a general blanket statement saying: TA (Technical Analysis) is a waste of time. I said it is not a waste of time. I did some searches on the definition of "Technical Analysis": http://www.google.com/search?hl=en&...analysis&sa=X&oi=glossary_definition&ct=title Those seem to be the general understanding of Technical Analysis: you look at a price chart along with volume. So unless you are trading solely based on the information on an order book of a stock... If you look at a chart, you are using Technical Analysis. Price action. What does it all mean? Do you trade on Double Top, Double Bottom, Head and Shoulder, Flags and Poles and all that (purely on the pattern, no indicator added). If you do, you are saying this is NOT Technical Analysis? I don't understand. Perhaps you can examplify for us - and I am not asking you to give out your trading secret, just a general explanation will do - what you base on (if you do base on something) to place your trade? You said "Price Action". It is so general that I don't quite know exactly what it is. It is breaking prior Support/Resistance? Did you read it off a chart? Oh... no, you don't need to look at a chart as you have all these numbers memorized right? And you get those numbers by reading the Ticker prints, right? I don't know if it makes me in an extreme minority. I enjoy reading and posting on ET regularly. I do trading for a living. Have been consistently profitable for over 3 years. I don't know if that qualifies as your "long term". I don't paper trade. And I don't think much of it (all those papertrade contests.) And BTW: I do use those useless, meaningless, lagging indicators such as Moving Averages, Bollinger Bands, RSI and such to help me place orders.
Quote from NoDoji: NoDoji (rewritten) There is a term in psychology called "DENIAL". Wiki: "...Denial is a defense mechanism postulated by Sigmund Freud, in which a person is faced with a fact that is too uncomfortable to accept and rejects it instead, insisting that it is not true despite what may be overwhelming evidence.." This is a problem of many who believe in and follow the Gods of TA. Your clueless support of technical indicators, your insistence that traders you don't know are profitable, lead me to believe that you are a) a paper trader, b) an unprofitable live trader, and/or c) have been seriously burned by misinterpreting technical signals. Have you verified the P/L posts on this site? Have you verified their trading method is totally based on TA? Have you presented hardcore evidence that TA indicators and patterns work? Can you Do you have any proof those guys are not paper traders, as very few traders are really profitable?
You left out the most important thing I said above. I am repeating it: Not according to everyone. Price action followers do not consider it to be technical analysis. TA is pretty much people throwing cans of lagging indicators and patterns at a market trying to get value add. TA has been pretty much shredded by serious institutional studies. Especially after including all trading costs. Every time this fact is brought up, TA lovers rebuke it via personal opinion, of course, without proof. However, many ET TA denizens swear by it in spite of the fact that almost no traders here are longterm seriously profitable.