Head & Shoulders, Cup & Handle, Hanging man, Shooting Star, Island Reversal, Bullish Belt Hold etc are a few of the very many perfect examples of ‘how to make a subject interesting’. In a field that’s considered more complicated than rocket science (not my view), you’ve got to give it to the learned people to truly make this subject quite fascinating. They certainly managed to pique my interest, and I’m sure I’m not alone!
Any activity that results directly into the money reserve moving higher or lower involves stress. But there’s a combat for that in the form of risk management, which Is Technical Analysis’ biggest strength. It’s the one thing that acts as a life boat in troubled waters.
Market participants over the past couple of months have been dealing with a market that has been moving in a trading range. Now this is where things become interesting. As a trader one must decide for themselves (depending on past experience of course) as to whether or not this is their playing field. There are certain people who excel at range-bound trading and others who look for swing moves. While these are learnings that we identify only after spending a considerable amount of time in the market, these learning can be elusive if not approached with the attention that they demand. When life is a mess, it makes sense to sit back, observe, plan and then execute. Similarly, when the market is in a mess, it is important to sit back and observe until you feel like joining the party again.
The beauty of this field is that you will learn things about your temperament, psyche, approach and reactions much faster than in any other field because these are what make up your arsenal. There is a common idea which involves wanting to defeat the market. But that is not the point of investments and trading. The point is to move with the market. Once it becomes a game of winning or losing, you are putting yourself in a place of superiority or inferiority. The market is not fond of one of these positions, and we all know which one! Take the phrase ‘The trend is your friend’ more seriously and life will be more peaceful!
This month we bring to you book reviews, breadth analysis, price analysis and the classic practice of ‘when in doubt, zoom out!’.
Until we meet again, Think Technically!
Rashmi Shastry, CMT
Editor