Posts Tagged ‘technical analysis bollinger bands’
Essential Maxims and More with Your Technical Analysis Course
Friday, March 19th, 2010A technical analysis course will teach you that there are sayings out there that can justify most things. There is always an equally plausible maxim that seems to take opposed actions and justify them . It doesn’t matter what the event happens to be a description can be provided by a maxim. Often traders decide to pick on that encourages their method of trading . It was stated by Orin Thevault that “selective perception” is what sociologists have called this . The most favored alibi comforts the trader when he deals with a smaller profit or even a loss .
The successful trader derides maxims as conventional wisdom , that don’t have any value and that are general and they are more for a random walk explanation rather than for a real plan for trading. He believes that success in trading requires more than than the right choice of a maxim.
“Nothing is so useless as a general maxim” .
– Thomas Babington
Lord – Macaulay – 1859
In theory , if a maxim was correct all the time it would be followed to such an extent as to eliminate its validity . Because of human nature, maxims are broken on a regular basis. If we have a great maxim , does it really mean much ? More than likley it won’t really be paid attention to. Everything can’t be remembered after all. Perhaps Lord Macaulay was really right. There are some of those maxims out there, which are applicable to good commodity trading . Some maxims are quite profound and should be remembered . You can make your own choice. Actually, I’d suggest you take maxims that work for you, make your own collection and repeatedly question and test them .
ESSENTIAL MAXIMS TO KEEP IN MIND
The top approach that will enable you to maximize your results is on a small scale playing a favorable game, but yet a chance of success is still reasonably provided, is playing a game that is favorable on a scale that is large avoiding ruin with enough early profits . Even an unfavorable game can give you results that are profitable if you bet heavy and seldom play . The only road that leads inevitably to disaster is constantly playing a game that is unfavorable . This can be learned by taking a technical analysis course.
Good sports die broke .
There is no such thing as a sure thing.
Traders sleep, markets don’t .
If enlightenment is the mutal goal, dialog is appropriate .
Accidental successes usually turn into accidental failures .
Positive and wnegative aspects are manifested in winning.
The many can’t accomplish what the few can do .
Take a position where there is little resistance .
Sell famine / buy glut .
Buy rumors – sell news .
A bull and bear can both make money – a hog can’t .
Don’t buy at the bottom and always sell too early .
Buy what will not go down in a bear market . Never buy something that won’t go up in a bull market .
Many a healthy reaction has proved fatal .
When market opinion leans to one side watch for a trend .
Patience is imporant . Wait for situations in which profit potentials seems unusually high .
Trade infrequently unless you’re trading plan reasonably requires you to take positions often .
Everyone can find fault with any maxim .
Use a safe deposit box to keep half of your profits.
It’s tougher to keep money than it is to make it.
The race doesn’t always go to the swift or the battle to the strong, but that’s the way to bet .
PESSIMIST MAXIMS
If anything can go wrong, it will
No matter what the result, there’s always someone to fake one better .
It doesn’t matter the results, someone will work to misinterpret it .
When you collect data , that figure that seems to be totally correct – is where a mistake will be .
It may be impossible to get a wrong number, but you can still find some way to do this.
The path that leads to failure is broad .
MAXIMS ON THE FUZZY SIDE
Let profits run and cut your lossings .
( this is like encouraging someone to be happy and stay healthy. )
On down days, only buy . Sell only on up days .
Only the school of hard knocks teaches better than a technical analysis course.
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Technical Analysis Course – A Close Look at Charting and How Weak it Can Be
Friday, February 12th, 2010It must be pointed out that as there are more and more market participants any attempt to predicate every action on chart rules , the accumulative effect of those similar actions self-creates price fluctuations which might destroy much of the validity of all chart techniques .
You have a lot of company if you’re a chartist . There are literally thousands of people charting every move like you are doing. So, when there’s the signal of a major move , you are liable to have a lot of the same orders as yours hitting the trading pits . In particular , having many chartists place their stop loss orders at points that are identical , may create false penetrations of trend lines and other formations . This means that charting is a science that is in some ways inexact , even for those chartists that have a technical analysis course under their belts .
You can make the choice about the scale your chart is on and whether the closing price or the mid-price is what you use. In order to plot movements of price, either can be distorted . The latter is the most often used , but as it comes at the end of the day a lot of profit taking and more is associated with it . Furthermore , dynamic and unforeseeable events may play havoc with charts .
Charting is to some extent a lazy approach . The neat clinical look of a sheet of paper appeals to the many weaker brethren . Those who don’t have time or liking to go further . Most people like to think it is more productive to look at all the variations. As technical analysis spreads and more and more people take a technical analysis course, this can defeat its purpose, especially in a “thin” market setting.
It is important to realize that is many traders are going with chart interpretations that are usual for a specific commodity, it can sway the commodity’s price in the direction chartists expect prices to move . Their own theories can be proven right by them . Pure chartists never want to know all about the fundamentals, combining futures trading taking from both strategies is what a wise trader will try. There is no 100% reliable chart formation . One must seek confirmation from other indicators , such as production changes each year, business cycle variation, and deviation in commodity prices or any other quantifiable sum , reduce to one figure in summary to register all the diverse activities .
Often the commodity goes completely contrary to fundamental considerations due to technical and other factors . To succeed chartists must be ready to do a lot of work and study and to develop more experience. It is an art because of the technician’s finesses, skill, and experience. These are all definitely profitable trading basic ingredients for success . The technician must constantly check and re-check .
Another weakness from charting is from the idea that while the speculator knows all the commodity situation facts other professionals and trading houses know these very same facts.
However, some events can occur without prediction and all traders are affected . These occurrences may not have totally discounted prices , and chartists may be caught unawares and there is very little left that can be done to protect a position in such a situation except being alert to catch these trend changes quickly and to act fast. ( Such as all the oranges being lost to a hurricane ).
Technicians are known to make a huge profit in one week and the next week take huge losses. It is a fact of life that prices aren’t dictated by past performance when fluctuating, although P&L charting can give you a good idea on a daily basis .
The advisability of most systems is indictable because of the absence of a track record . Each approach has to be looked at as unsuccessful until there is other proof . To be perfectly candid , there is very little objective explicit evidence available to support chart analysis and it’s common rules . Trends are anticipated by various chartists . This doesn’t work. One cannot assume or recognize a trend that does not exist . When trying to use the following method to utilize a trend , one must wait until the trend has demonstrated itself . Even then, the chartist’s motto with regards to a trend is that a trend continues until it stops . Again , he attempts to anticipate the direction of a trend reversal as it evolves . This is impossible . You can only realize an evolving trend as it happens. Most technical systems cannot anticipate a trend or trend reversal .
If a move occurs that is unexpected , most technicians have to begin again . After going through a string of bad losses , technical studies are often abandoned by traders because they just don’t work . As it is a fairly common phenomenon , it offers more proof that short cuts don’t exist to trading success and no substitutes for experience, knowledge and hard work .
All we know for sure is that prices will fluctuate , but we don’t know how much they’ll fluctuate .
Only in congestion areas are you protected because the congestion area defines you’re projection of losses . Prices fluctuate in congestions . Using a technical approach that tries to take congestion areas and analyze them , and therein a trading method comes into being, will give the trader and the broker large profits, as commodity prices are in congestion , one form or another 85 % of the time .
The universal problem known to the professional and novice alike is when to get in and out of the market . Due to this, a technical analysis course will help you realize that technical analysis must to some degree encompass the short term price fluctuations (Another plug for P&L charting ).
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