The “bible” of technical analysis in trading is Technical Analysis of the Financial Markets, literally a tome about a billion pages long, lists hundreds or thousands of indicators that traders plot on their charts to help them trade effectively. Technical Analysis for Day Trading: Voodoo? They’ve got a lot of wild and crazy names like “Stochastics, MACD, Bollinger Bands, Keltner Channels” and many others, but they all have 2 things in common. 1. They are all based ultimately on mathematical computations. 2. They are all attempts to improve our guesses about what will happen in the future based on what happened in the past. The purpose of technical analysis is to use computations and history to create an edge that skews the results of market movement in your favor so you can end up with a profit at the end of the day (or week, month or year). Well that’s fine and dandy but with hundreds or thousands of options of indicators to plot on your chart (and today’s charting systems allow for tons of them to be plotted), which ones do you choose and which are best and which ones are appropriate to the time frame I’m trading, and… which ones will guarantee that I make money? LOL. The truth is no one knows for sure what answers to give you. I take that back, there are plenty of people out there happy to give you answers (sell them to you I should say), but the problem I have always had and will always have with this is that something that works for Joe might not work for Mary, because Mary is a different person, with a different psychology, different mindset, different patience level, different lots of other things. I can vouch for my chosen set of technical indicators and technical analysis methods for ME, but I can’t vouch for the fact they will work for YOU, unless you do exactly as I do with the mindset I have and the actions I take. This is a big part of why day trading is a constant fascination to me, because ultimately it is all psychology. The markets area all psychology. The public response to the markets… all psychology. Traders and their way of working with the markets, all psychology. Does technical analysis for day trading work? Yes, definitely… but only when you yourself – using real self knowledge and real self-confrontation – figure out that “just right” combination of technical analysis tools that is a correct match with your own personality. If you are going to learn how to day trade, you are going to have to learn a lot about yourself in the meantime also. I wish I could tell you it was just a matter of flipping a switch, but it isn’t. Some of the best traders I know took TEN YEARS to learn their craft. And these are some smart cookies.
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