Pullback
Sometimes I think the world probably does not want to see yet another blog from me illustrating yet another basic pattern… but these “basic patterns” can be wildly profitable. You can build your entire trading career around this one, simple pattern. The attached chart shows a recent pullback in 10
Technical Patterns
Looking at multiple timeframes of the same market (“multiple timeframe analysis”) is a common practice. There are many nuances to this approach, and many ways to use the information on different timeframes. But what do we do when the timeframes are in conflict? What do we do when one timeframe
Individual Traders
Sometimes, it’s hard to know where to start. When we look at charts or go to the market for trading ideas, thousands of pieces of information compete for our attention. In this post, I’ll share a look at some of the key technical factors I consider when making
Psychology
I’ve been thinking and writing a lot about uncertainty lately—and about making decisions with incomplete information. Over the past two years, we've all had to make decisions in an uncertain environment as the world struggles with Covid. There are many other lessons and parallels from other
Breakout
What happens if you miss a trade? Newer traders will often make a frustrated FOMO trade, and add a loss to what should have been a non-event. More experienced traders gain the self control to move on—this happens and it’s just part of the game. But sometimes we
General Comments
One of the interesting developments of the past ten years is the gradual death of the “life hack” approach. This is a good thing. The reason this movement has died is because most “hacks” simply don’t work. But if you’re trying to develop a trading approach, you need
General Comments
I took part in an interesting exchange in a Facebook group last night, in which a trader was asking “should I buy puts or calls for the spy or qqq?” This trader, by his own admission, was a consistently losing trader. The question began with something like “I’m going
Pullback
Summertime is here, and, as far as markets are concerned, it's been here a while. One of the characteristics of summertime trading is generally lower volatility and poorer followthrough. Summer markets are not untradable, but they do require utmost discipline--any mistake will likely be severely punished. In some
Breakout
One of the disconnects for new traders is seeing how patterns play out in the real world. When we learn patterns, we usually start from pristine, idealized examples. But in actual trading, things get messy and simple patterns are not so simple. Breakouts and breakout failures can give us some
General Comments
How do we learn? For most things, a pretty simple plan works: do something and evaluate the results. Make some changes to what you do, and see how the results change. If your results get better, do more of the thing. If your results get worse, go the other way.
Climax
Bands or channels are usually set up around some type of moving average. They define what is normal for a market, so excursions outside the bands are potentially interesting. There are many ways to create bands. Two of the most common are Bollinger Bands and Keltner Channels. (We prefer Keltners
Pullback
One of the key questions that comes up with developing traders is “how do I get into trades? Where exact do I enter?” On one hand, the answer to that is that it really doesn’t matter that much—if you get direction right (meaning you can read market structure