Psychology
We all have ego. Everyone likes to be right, likes to be seen as intelligent, and likes to be a winner. We all hate to lose, and we hate to be wrong; traders, as a group, tend to be more competitive than the average person. These personality traits are part
Anti
Gaps are important. Gaps on charts can show powerful shifts in market dynamics, and we can identify some interesting tendencies around these gaps. Intraday traders often find an edge in fading gaps, but let's look today what happens over a longer time span. Consider the daily chart of
Podcast
Three more reader questions this week: how do we deal with runs of wins and losses? What about applying technicals to non-linear (or derived time series), and how do we translate trading strategies to options from the underlying instruments? Alan asks: Hi Adam, hope all is well. I was mulling
Trader Development
You have to be a disciplined trader. This is one of the nuggets of trading wisdom we hear constantly, and for good reason--it's true. Without discipline, we will make many mistakes in the highly competitive market environment. But it's not as simple as saying to yourself
Technical Patterns
Richard Wyckoff was one of the founding fathers of technical analysis, and one of his most useful concepts was to divide the market into an idealized cycle of accumulation, mark-up, distribution, and markdown. Though it can be difficult to apply this model in actual trading, it has many important lessons
Failure Test
Multiple timeframe analysis is almost a buzzword in technical analysis. I have been involved in markets actively for two decades, and have been an active participant in dialogue about markets for most of that time. It is interesting to see different techniques take the spotlight as groups of traders hold
Podcast
I answer three reader questions here, and stretch the boundaries of this podcast just a little bit. Igor asks: "We know that the smaller the timeframe(TF), the more random the market is, and longer TFs are less random. If you want to risk X% of your capital than
Pullback
For anyone actively trading, looking at the markets you follow is a critical part of the investment process. Whether you do this once a week, once a day, or many times a day depends on how you trade and who you are, but it is essential that you are somehow
Pullback
Let me preface this by saying two things: First, I'm bullish on global stocks over even moderately long timeframes. Technicians like to call tops, but I think this bull market could have several more years in it. However, I'm also always looking for evidence that contradicts
Technical Patterns
One important question for discretionary traders to consider is how to weigh objective and subjective elements in technical analysis. Some things are simple and clear, which is one reason that many traders focus on indicators: Price is above the moving average, or it is not. The MACD histogram is higher
Pullback
There are patterns in market prices that can point to trading opportunities and potential profits. This is one of the fundamental assumptions of technical/tactical trading (and can be verified by quantitative and statistical analysis.) Most people are familiar with the idea of finding patterns to set up trades, but
Podcast
Process--it doesn't sound exciting, but it's maybe the most important part of what we do. In fact, it's the Holy Grail in trading: having something you can replicate year after year that will bring consistent results--this is how a successful trading program is built.