I still love charts, and they are still my bread and butter to finding, setting up, and managing trades. For every knucklehead who asks me: “You know what you find next to a sunken ship?”
“I give up.”
“A chart.”
“Ha ha.”
I know that there is no way that trading news or fundamentals can work, without an understanding of how much or how little the news has been discounted into the market. So the battle lines are drawn: fundamental traders versus chartists. I don’t think it has to be that way. I think a hybrid of each, knowing which to use when, is the ultimate solution. But I didn’t always think that way.
My chart junkie ways started like most. An interest in learning how to trade and a charting subscription sent to my home each Monday. This was back when I hated weekends because the markets were closed. Yeah, I needed help or at the very least a hobby. There was little else I could get my hands on at this time in the history of mankind because there was really no Internet to speak of, and those giant mochaccino-lands with books didn’t exist. So it was me, glued to a fledgling channel hardly anyone watched called the Consumer News and Business Channel and Schabacker’s “Technical Analysis and Stock Market Profits.”
I would sit for hours poring over about 30 end-of-day charts of the futures market. A pen and ruler and calculator was as sophisticated as it got. Forget streaming data and intraday charts; this was old school. You know there’s nothing like going over printed charts manually with pen and ruler. If I sound like I am pining for the days of yore, I guess in some ways I am.
But it wasn’t perfect. And I’m here to tell you that the bell curve of your trading will follow a path similar to mine, similar to a lot of traders and would-be traders. As with anything new and exciting, you can’t get enough. Not unlike your first car, first home, first puppy, or new love. It’s all-consuming, and that’s what makes it great. You’re going to dive headfirst into that new charting software, demo trade the heck out of that new order entry platform (and start convincing yourself that the practice trades are real), read every book written on the subject of trading, attend seminars, watch CNBC, and nod as though you understand most of it, discover dead Italian mathematicians (Fibonacci), and probably start making a series of the worst trades ever made. Then and only then will you really start to learn. Sadly and typically, the pain must come first. Now, with your bruised ego, you do all of the above again. Only this time there’s doubt and fear, and that’s when you think that someone else has the answers. Here’s a quick tip: They don’t.
Most traders want to know everything. Pursuing that is, of course, insane. But we all get crazy for a bit, overcompensating for the fact that we know that we don’t know nearly enough. As we begin to try and apply too much, naturally we begin that process of whittling away what doesn’t work and what we don’t understand. If we continue to do this, eventually we find that we’re not looking to add but rather subtract until we find the handful of studies, tools, and whatnot that will finally conclude our search of “what works.” That’s closing the gate. Keep the stuff that you want out, and keep what you need in.
The quicker you can recognize where you are along this bell curve, the better and the sooner you can get to closing the gate, the closer you will be to becoming a trader. That’s a fact! There is a common thought that you should never stop learning, and it’s true, but knowledge is depth, not breadth. Knowing more is not always useful, knowing better, knowing deeper, with more understanding is.
It’s more tempting out there in the world of trading, investing, and the markets than ever. Today’s streaming data is more affordable than ever, and the charting platforms that you can find for free online are better than the platforms I used 10, 12 years ago and paid $800 a month for. The indicators are seemingly unlimited, fast, and instant. But you know what, most traders still stink, I mean really stink: losers to the tune of about 90 percent plus. So it’s not technology that’s going to make us better traders. You can use my approach to trade any market and any time frame, forex, futures, and stocks!
One of the biggest mistakes I see with traders is that they fail to understand that no market is an island. There’s no such thing as a market that trades inside a bubble. Markets move one another and are connected across so many fronts: forex to futures to stocks and back again. I don’t consider myself just a forex trader. I trade futures, stocks, options, and I do this not because with price I can level the playing field, get an unfiltered read on market psychology, and trade liquid markets. I do this because it makes all my trading better. You’ll learn more about the futures-forex connection when we discuss my Forex Market Pulse and the specific relationship forex has to the U.S. dollar, Dow Jones, crude oil, and gold.
“I give up.”
“A chart.”
“Ha ha.”
I know that there is no way that trading news or fundamentals can work, without an understanding of how much or how little the news has been discounted into the market. So the battle lines are drawn: fundamental traders versus chartists. I don’t think it has to be that way. I think a hybrid of each, knowing which to use when, is the ultimate solution. But I didn’t always think that way.
My chart junkie ways started like most. An interest in learning how to trade and a charting subscription sent to my home each Monday. This was back when I hated weekends because the markets were closed. Yeah, I needed help or at the very least a hobby. There was little else I could get my hands on at this time in the history of mankind because there was really no Internet to speak of, and those giant mochaccino-lands with books didn’t exist. So it was me, glued to a fledgling channel hardly anyone watched called the Consumer News and Business Channel and Schabacker’s “Technical Analysis and Stock Market Profits.”
I would sit for hours poring over about 30 end-of-day charts of the futures market. A pen and ruler and calculator was as sophisticated as it got. Forget streaming data and intraday charts; this was old school. You know there’s nothing like going over printed charts manually with pen and ruler. If I sound like I am pining for the days of yore, I guess in some ways I am.
But it wasn’t perfect. And I’m here to tell you that the bell curve of your trading will follow a path similar to mine, similar to a lot of traders and would-be traders. As with anything new and exciting, you can’t get enough. Not unlike your first car, first home, first puppy, or new love. It’s all-consuming, and that’s what makes it great. You’re going to dive headfirst into that new charting software, demo trade the heck out of that new order entry platform (and start convincing yourself that the practice trades are real), read every book written on the subject of trading, attend seminars, watch CNBC, and nod as though you understand most of it, discover dead Italian mathematicians (Fibonacci), and probably start making a series of the worst trades ever made. Then and only then will you really start to learn. Sadly and typically, the pain must come first. Now, with your bruised ego, you do all of the above again. Only this time there’s doubt and fear, and that’s when you think that someone else has the answers. Here’s a quick tip: They don’t.
Most traders want to know everything. Pursuing that is, of course, insane. But we all get crazy for a bit, overcompensating for the fact that we know that we don’t know nearly enough. As we begin to try and apply too much, naturally we begin that process of whittling away what doesn’t work and what we don’t understand. If we continue to do this, eventually we find that we’re not looking to add but rather subtract until we find the handful of studies, tools, and whatnot that will finally conclude our search of “what works.” That’s closing the gate. Keep the stuff that you want out, and keep what you need in.
The quicker you can recognize where you are along this bell curve, the better and the sooner you can get to closing the gate, the closer you will be to becoming a trader. That’s a fact! There is a common thought that you should never stop learning, and it’s true, but knowledge is depth, not breadth. Knowing more is not always useful, knowing better, knowing deeper, with more understanding is.
It’s more tempting out there in the world of trading, investing, and the markets than ever. Today’s streaming data is more affordable than ever, and the charting platforms that you can find for free online are better than the platforms I used 10, 12 years ago and paid $800 a month for. The indicators are seemingly unlimited, fast, and instant. But you know what, most traders still stink, I mean really stink: losers to the tune of about 90 percent plus. So it’s not technology that’s going to make us better traders. You can use my approach to trade any market and any time frame, forex, futures, and stocks!
One of the biggest mistakes I see with traders is that they fail to understand that no market is an island. There’s no such thing as a market that trades inside a bubble. Markets move one another and are connected across so many fronts: forex to futures to stocks and back again. I don’t consider myself just a forex trader. I trade futures, stocks, options, and I do this not because with price I can level the playing field, get an unfiltered read on market psychology, and trade liquid markets. I do this because it makes all my trading better. You’ll learn more about the futures-forex connection when we discuss my Forex Market Pulse and the specific relationship forex has to the U.S. dollar, Dow Jones, crude oil, and gold.
