Technical Trading Tactics : Part Two

Technical analysis is the study of a market’s price data, which is created by the emotions of the participants. Price reflects the current or anticipated value of a market from a supply and demand perspective. Price is the true and absolute reflection of value, as perceived by the various market participants at a particular point in time.There are a number of different forms of analysis.My focus is on market reversals incorporating pivot point analysis with other methods to nail down time and price predictions.All traders have access to four common denominators: open, high, low, and closing price. How you analyze, interpret, and act on the information available is what gives you a trading style that differentiates you from other traders. Successful traders interpret correctly and act swiftly. 

There are five business days in every week and usually four weeks in every month. One day within a month will usually mark a price high, another day will generally mark a low, and the market will close somewhere between those points. Those facts define the monthly range. The successful trader does not consistently make a habit of buying the high of the range or selling the low of the range. 

And Remember “A profit is a profit, no matter how small.” That is a great line, but let’s define “small profit.” Coming to this business to risk thousands of dollars to make a hundred dollars or so isn’t the way this trading environment should be used.

Another old saying describes someone who takes small profits and lets big losers ride: “Eating like a bird and crapping like an elephant.” That is the essence of a habit you don’t want.If you catch yourself getting into that habit, stop trading. Try not to get used to taking small profits constantly and letting losses get large before taking them. You need to develop good discipline and strong emotional traits. Otherwise, fear of losing will hinder your performance.

Thanks for today. Happy Trading