Chart, page-25

WoW, that was eloquently written, you make me feel I needed to go back to primary school to learn some basic writing skills!

As a student of TA for maybe close to a decade, my charts skills have obviously improved from day 1. In all this time of learning to read price, I was initially distracted like a lot who were starting in TA with the same aim, to be able to predict where price will go to. These initial YEARS were spent learning many math indicators from trend, oscillators, volatility measurement and directional tools. Add to it divergence bullish/bearish. Not satisfied I also spent a lot of time with trendlines, pattern from H&S, triangles, wedges, flags etc. Results were mixed and I am being optimistic. It is like reading a book on rocket science, I can read it but never understand what I am reading! All along chucking real money to this exponential education so I thought. I tried mechanical trading systems, with built in trading intelligence and all I have to so is scans and the system will manage all that profits.

These trend following trading system was obviously working because I got lucky during the mother of all bull run engineered by Chinese growth. Yeah Yeah, never confuse brains with a bull markets and all that jazz right? Bullish divergence off the MACD/Stoch were also working because the market kept going up! Hell fundamental analysis with a degree of gut feel also made heaps.

And then came the GFC destruction. Plenty of bullish divergence, picking the bottom, buy and hold because long term is a healer of capital etc.... All the usual BS retail crap I read along the way and I won't name forums. Ah the biggest of them all is average down! Don't do it the brain say but the heart says LT it will always come back tight? And it lowers my cost price, what a beauty!

So here we are and Wombat have a good grasp of what this is all about. He was a student of S Nisson and Mark Douglas. I have only read their passive books! The most important lesson along the way for me is to be able to explain why I take a trade or investment precisely. Gut feel or just looks good on the chart are bad reasons. I should be able to explain to a kid why I took a trade or why a trade is not working out and I am cutting the loss. In fact the biggest problem I have is when to jump out of a profitable trade. The stress of deciding when to cut a profitable trade is more stressful than being trapped in a losing trade. The later does not have many options. To cut a long story short Wombat has mentioned many times surviving boom to busts so he is much more experience than me and better use of control of euphoria than myself so he knows this subject much better than I.

I have decided to use naked charts with a few simple horizontal lines as folks may have notice when I post a chart. I can explain what I see form the chart and these are not gospel truth. They are reasons I find valid to act.

However trendlines as an ex-user, I could not explain why a price sometimes "bounce" off those angle lines. The other issue I have is a slight angle tweak and the whole flavour of the chart alters dramatically. I don't want to get into a debate on TA tools but I find trend lines similar to Elliot Wave theorists. No one agree where the wave count starts just like no one can agree the trend angle. And my favourite tools that I spent 6 months diligently studying is Harmonic patterns. If people think the predictability of Fib ratios are precise usually in hindsight charts, you gotta get your hands on these sophisticated patterns. It will take many days to explain the "power" of these tools! Do you know why the attract a certain crowd? Yes the mystic nature of how these butterfly, gartley patterns are derives. Just like the trend line examples, when they work they just work is usually the typical answer I get. Equally when you see a harmonic pattern plays out in hindsight charts you will be amazed!

I left out Gann, EW and Fibo time series as well as Astro trading because these are too predictive for even my humble self! So I have been almost full circle wasting my time and money on books, courses and countless passive hours learning how to predict prices! I switch back to simple is best Guinness strategy, less is more which includes trades as well as what I put on the chart. I stopped having an opinion that I know where price will end up let alone the month and year it will happen. I control the things I can control and Price isn't one of them. When I lose a trade that is because I will have losing trade. Did I follow my strategy is the first question I ask myself!

And last but not least whether investing or trading, no one talks about the psychology of holding a positions and the mind set required to do so. Surprisingly not many trading books do so and skate through this topic like it is not important focusing on how great they are with indicators and telling you when to enter and that is it. The profit takes care of themselves? They teach you to plan the trade and trade the plan but they don't tell you what the plan is. Usually some patch work entry strategy with a few cherry picked examples and off you go chum, a successful trader/investor!

This is my pep talk to myself for the day. Sorry it was not aim at anyone who does not take what I have wrote seriously so ignore me if you want to. Cheers.