TMS: Is The Technical Recipe Right?
If technical analysis was the answer then why isn't every trader making money?
That's because technical analysis is the answer but chances are your technical recipe is just not right!
If you don't know how to make your finest dish, the chances are it just won't come out as it should! Ask Wolfgang Johann Puck to serve your finest dish and no doubt the end result would be bang on the money!
If you were building you're house various components would be involved on making sure the construction is completed to the required standards. If you ever were to ask me to get my construction helmet for a lending hand then I would say that my DIY skills may not fit the bill as the Big Bad Wolf would probably be able to blow your house away with ease!
Traders can use fundamental analysis or technical analysis - some like driving jeeps but some like driving cars, they both will get you from A to B! At TMS we love the fast paced technicals!
So why do traders get the technical recipe so damn wrong?
We are talking technicals - Indicators, systems, moving averages, RSI's, Stochastic, volatility, Bollinger bands and the list simply is endless!
What exactly is needed? When you Buy a car and if it serves your purpose chances are you'll keep it until it's time to change it! Even if you have more money than Warren Buffet you just won't buy every single brand supercar in the world! So why do traders feel they need to get every technical aspect under their belt? If you like the name of your technical indicator AND importantly if it works then how many more 100's of indicators do you need?
That is a problem amongst traders! The age of computers, technology and electronic trading have a lot of hype attached to it! There are probably more books on technical analysis then financial instruments! We have more students for courses being taught on technical analysis then kindergarten toddlers in the USA. To be perfectly honest it seems like the hype is here to stay!
The bottom line is that in trading the KISS approach needs to be implemented at some stage - Keep it simple & stupid!
Why KISS?
Because when you work out that technical analysis is the answer you will then need to balance your ego and your emotions!
Firstly traders overkill technical analysis and mess up the recipe by adding in ingredients that they DON'T need!
BUT when you have the right ingredients what use is that if you don't know how long your dish should be in the oven?
THAT is precisely what BURNS technical analysis - your emotions!
In all our years in trading, we hear from the ones that make it and then sadly we also hear from the ones that don't. The ironic thing is that the failures of one losing trader are very similar to the other losing trader!
This is it; the emotions defeat your technical analysis. When you win the ego takes over, when you lose the emotions lose as well. If your system or indicator is good and you can read it well enough then why is it that when one losing trade comes along the boat simply gets rocked! Two losing trades and you're sweating and the heart beats faster than ever. Three losing trades and it's time to search for a new technical trading system! Oh well you'll start the cycle with another indicator now but the one you just left behind probably went on to obtain ten winning trades in a row!
If you can have your technical analysis in place but also use it along with the right temperature for your emotions then the probabilities of success are immensely favourable. This way winning 50-60% percent of the time will work!
If you want to win big with small capital outlay then the lottery syndicate would be a better option as even if you were lucky enough to nail some big sums the reality is that those sums will always vanish as this type of approach is a killer in trading.
- In trading your input is not proportional to your output!
- In trading you shouldn't calculate your output without working out your input - defining your risk in relation to your reward via money management is truly paramount!
- In trading your output can be enormously larger than your input when your technical recipe, emotions and discipline are structured in unison with one another in optimal fashion at all times!
So the next time your technical analysis provides you with a wrong trade just make sure you don't start changing or adding to your technical indicators and systems as 90% of the time your mistakes will be due to your emotions and your lack of disciplinary characteristics that you possess.
- Control your emotions
- Solidify your discipline in life - not just in trading AND then you can
- Tweak your technical recipe for trading success!
My name is Ajit Singh and my work with the financial markets started from the young age of 17! We are www.tradingmarketsignals.com and so far in August our TMS system has gained 512 points from five major markets: Dow Jones, Euro, Sterling, FTSE100 & Crude Oil.
www.tradingmarketsignals - Weekend Membership Special: Please note TMS has an annual membership special which is open until the end of August 2010 BUT this weekend we're issuing a special reduction of $40 for 20 members only open only for our safehaven.com audience- ends on the 16th. http://tradingmarketsignals.com/#/tms-annual-membership-offer/4542738012
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