Text Book of Technical Analysis - Index
A follower of mine once messaged me: -
“i really like your article and i would like to ask you if you want to teach me more things . i am 29 years old and i leave at greece .forex is my dream . not just for the money but because i think it is the top brain skills. i always like to work my brain . 8 hours i sleep 1 excursing my body and the rest my mind . no tv . no games nothing to waste time without taking somethink back. but to learn something at this life you have to do it yourself or somebody who knows have to teach you . i can understand from what you say that you know many more things that i do no know . i would like you to be my teacher if you want to .”
At first glance I ignored the message. But later on, the continued chat amazed me about how much the trader is serious about learning more in trading. While speaking with other traders I realized that there are a few who are really serious about learning to trade for living. There are a lot of others who want to learn how to interpret the indicators but shy to come forward. Hence I decided to write a long and in depth writing on how to use the tools available to trade to win.
Trading, A mind game:
Trading is basically an emotional game than anything else. We may have many types of indicators but what action we take at the market is totally based on emotion. So, understanding the human brain structure is important now.
As we know, human brain consists of 2 parts viz. Left and Right.
Most of the times, one part of our brain dominates the other part. Determining which side of our
brain is the dominant side may help us understand the form of market analysis
that we might like to use. The following pictures show how an action of the
brain is divided. To test which part of your brain dominates, you may take a
brain test at http://mindmedia.com/braintest.html
If your left brain is dominant you may relate to and place more emphasis
and confidence in support and resistance levels derived from mathematical
formulas such as pivot points and Fibonacci and technical indicators as well as supply/demand reports or statistical data. On the other hand, If the right side of your
brain dominates your thinking as a technical chart analyst, then you have a
strong tendency to remember and recall chart patterns. You may put more
confidence in chart pattern techniques and the ensuing theories of measurement
techniques and methodologies behind these formations. For this kind of thinker,
learning traditional chart patterns and Japanese candlestick formations may
evolve to become a reasonable method to interpret and process data to act on
trading decisions. (derived)
In this article series I put emphasize on both Left and Right brain activities and you may pick the best as per your own experience.
Trading is a war of bulls and bears. We can't win a war with one weapon but with lot of other supports, which we will discuss in the following months. From next month I will write the following subjects with
each topic covering at least 2 or 3 parts due to restrictions in words and also I don’t want to bore readers with putting everything in one go. I only share what I trade and I use only popular indicators/oscillators which have been used by many. As I progress, i will also discuss about how to mix indicators and use money management to trade.
This is only a tentative list and may change the orders and months of writing.
Pivot points- the day trader’s Brahmastra
- Back ground of pivot points,
- Types of pivot points
- How to compute different types of pivot points
- How to Use pivot points
Fibonacci: The golden ratio
- Fibonacci basics and how to implement it in trading.
- How to chose the highs and lows for fibonacci
Chart patterns and Trend lines -visual trader’s boon
- How to read the charts and interpret it
- What are the entry and exit strategies based on chart patterns.
Candle sticks – the leading reversal indicator.
- How to use the candle stick formation to identify the
- What types of candles gives the signals of reverasal.
- Using the reversals based on Single candle reversals
- Combination candles
- Using different time frame candle sticks formation.
October : Reserved for other topics.
Topics covered previously have a defined entry and exit strategy but the next topics requires continuous monitoring of market which can give better returns compared to fixed take profit and stops of the other topics.
RSI (Relative Strength Index):
- Importance of RSI
- Trading the over bought and over sold zones
- Trading the Divergence in RSI.
- Money management while trading the divergences.
- Using different time frames to decide the trend
MACD: Moving Average Convergence Divergence
- Trading with convergence and divergence.
- Time frames to use MACD.
- Importance, features and use.
- Applying in real trading.
- Time frames to be used for Stochastic.
Moving averages (MA)– the trend decider.
- Types of moving averages.
- Trading the cross over of MA
- Long and short period MA
- Entry and exit strategies with MA
February: Reserved for other topics
My trading secret 1
Depending on how readers react to my previous articles, I will discuss a trading strategy of eur/usd
which requires no indicators but only plain mathematics and judgment.
My trading secret 2
Please wait for this wonderful tool. Of course, I've not invented any thing on my own but only learnt to tweak an indicator to get the best trading signal.
We should always remember that there is no holy grail in trading.
It is impossible to catch the tops and bottoms.
We will only discuss how to use the above popular tools to trade the trend
We can't win all the trades. Always use low leverage and be consistent in performance to grow your portfolio
If you think I should cover some other topics in this TBofTA series please share your views here, which I will try to publish in the reserved months.
Please avoid commenting “good luck”, “nice article” etc. Try
to make this a place to discuss where in we all can learn from each other.
Thanks for understanding.