Hey folks, During the past few months, I have been studying about TA and price action trading. But I am so stuck and can not move on any further. I always have this question in my mind which I can't find a persuasive answer to it. If there is a pattern/ strategy/ edge to consistently beat the market using price action and charts then competition from other traders should make it disappear or at least make it difficult to beat the market after costs. (the edge should self-defeats). In other words, beating the market using past price data seems too good to be true because if it is not the case then that would be very easy for everyone to do the same. It is very reasonable to believe that the massive competition should eventually make any advantage/ edge self-defeat and stop working. So, what am I missing here guys ? Sorry for my average English. And thanks in advance
your english is better than average and your thinking ability is far better... I have made many posts on this... everything is self-defeating.. except the real edge, which is the trader himself. a trader who can think better than the others can never get that edge taken away from him.
Your English is good. It is very difficult to learn to trade and to use TA well in order to make a profit through day-trading, where orthodox TA tends to be less reliable anyway. Better to become a good long-term trader using TA, then move to short-term intra-day trades if you wish. Start with trends. On your charts, can you define what you should see in an ideal trend? can you quantify chart features that make trend A better than trend B? can you identify the dividing line between a trend you should trade and a trend you should avoid? (by "ideal trend" I mean a trend that would very closely suit your trading strategy and personal trading style, risk tolerance, patience, psychology etc.)
Past few months? You can expect years to fly by before knowledge is accumulated, few months is really nothing as it asks more questions than reality. Better traders understand "flow" of price action, they understand when "NOT" to take signals, what is happening in recent or long past you should not take trades and if any current price action can negate the past. Angles of slopes, some you stand aside and others you increase size. You are going up against some of the brightest people on the planet who love the challenge to do better than what they made last year, so it is not you beating the markets, you against you. There are few or many reasons people fail, most of all, it is battles within ourselves that keep us from success. Trading well is like this: You must have skills the masses either can't attain or do not want to spend enough time solving.
When the road gets too crowded, go look for another road less traveled. Even if you drive the same car, you will get there faster.
Hey Alaa, why to bother yourself with questions, that produces no results and only analysis-paralysis, while one can take action, and find it out ? ,,...beating the market using past price data seems too good to be true...,, And still - it works
You are operating from the wrong premise. Traders don't make money by "beating the market" but by recognizing what the market wants to do and go along for the ride. It takes time and effort to be able to see this on the charts. Time best spent ignoring the dopes on ET also.
Markets are very fluid, they morph to different states due to mood swings. As well, unbeknown to many, a lot of trades are dummy trades, purposely placed to draw in the unsuspecting, a litle bit like a sweetened insect trap. When smart money are exiting, they create a buying illusion. Similarly, when they wish to buy, will drive down price so they get a better entry.
While your edge might fade over time, human nature (especially greed and fear) does not. That's why you can be confident that the stock market will be here forever as long as there are people left to trade. BTW too much thinking (aka analysis paralysis) is rather detrimental to trading.