A technical trader is often caught up in what I call technical trading roller coast when he or she is denying himself (or herself) the next step to be a better technical trader.
I will be explaining to traders what is the technical trading roller coaster and guide them to quickly improve. Let's get started.
Dangers Of Being A Purest Technical Trader
A technical trader who does not take the next step is in danger of leaving the financial markets very soon.
Every year, those who identify themselves as pure technical traders are forced to leave the financial markets because they are ignoring other market players.
Many of them can trade very well or have a lot of experience, but have let themselves down.
It is an unacceptable and unfair situation.
Indeed, many of those could have become excellent traders or investors if and only if they know that technical trading is only one of the aspects of dealing in the financial markets. Apart from letting themselves down, they have also dumped large sum of money that could have been used for better things in life.
It is understandable that at the first step of the ladder of trading and investing, one is trying and testing many technical indicators in view to familiarize oneself with them. Nevertheless, one can not just stay at that level for life.
In my opinion, a financial market player ought to set a goal as soon as possible to avoid leaving the markets too soon. To set a viable goal , one must take a look at the ladder of trading and investing. That will help one to define a suitable and achievable goal.
There is also a danger that a technical trader wastes so much time wandering before realising that he or she must begin to combine other markets dealing methods with the technical analysis.
It is also common that a technical trader is frustrated to the point that he or she is contemplating to give up trading and investing even though deep down he or she knows that he or she can trade (knowing how to trade).
How To Avoid Technical Trading Roller Coaster?
To avoid technical trading roller coaster, one must always use economic news and fundamentals with technical trading strategies.
In the old days, when everyone was using chart patterns, one could get away with it, but nowadays a technical trader can no more bypass the economic news and fundamental analysis.
Truly, technical traders who begin to take heed of the economic news and financials will quickly improve trading decisions.
Usually, it is an economic news that will cause one to load a trading software and begin a technical analysis before checking the fundamentals or perform at least the Google finance acid test.
Really it goes like this: 1/ economic news 2/ technical analysis 3/ fundamental analysis That is the best approach. Apart from that best approach, one may choose: 1/ technical analysis 2/ check if news are confirming the setup if not wait ( put it on a watch list). 3/ fundamental analysis
As I have being banging on it, a technical trader who is avoiding or postponing the next step on the ladder of trading or investing is on a technical trading roller coaster.
That person may be forced to leave the markets though in many cases, many of them can trade very well.
Another Cause Of Technical Trading Roller Coaster
I have seen it when a technical trader who finally begins to use both economic news and fundamentals sadly throws away everything he or she has gained as a technical trader. What a waste. Please do not fall into that trap.
It is a pity state.
Please note that the technical analysis does help to improve the market timing and risk control, but the fundamentals allow one to pick the best bearish or bullish financial instrument.
Everything that one has learnt before can help one to become a better financial market player. Therefore, one should always remember to use both the technical and fundamental analysis.
Other Technical Trading Roller Coasters
It happens when an advanced technical trader has downgraded himself or herself.
This is the case of an Elliott wave trader who after mastering the wave principle trading discards all the technical indicators and essential elementary technical trading tactics.
It is also the case of an advanced technical trader who is fluent in both Fibonacci and wave trading, but refuses to incorporate the economic news and fundamental analysis.
What a shame!I mean that person deserves twenty-four lashes in a public place with two strong men holding both his arms and legs. I mean it.
Alright, you get it. Please do not worry, I am just surprised that an advanced technical trader can reach such a high level and fail to take the next step. It is worse than a fundamental trader or investor who refuses to learn more about the market timing.
Why Technical Traders Do Let Themselves Down?
The first reason is because they convince themselves that they are not good at using the economic news and financials.
Really, fifty per cent of those can quickly and easily excel in those if they allow themselves. In fact, it is just a self denial.
Like every self denial, it is a self restriction. All they need to do is to make a firm decision. That decision will wake up the fundamental trader in them. I have seen a technical trader becomes an excellent fundamental trader. So please give it a try. Keep learning non stop.
Another reason why technical traders do let themselves down is because they are not interested in mastering the economic news and financials. Please start with reading more economic news.
That could be MSN Money news, Yahoo finance or downloading the smart news application onto your smartphones, and connecting to as many financial news websites as possible.
Just make yourself available, and start like you are just playing and slowly get into it. Please, do not block yourself, but be open to it. That is the only way one will begin to be interested in those. Alright? Good!
That is really what I want to share about technical trading roller coaster.
The feeling is really good when a technical trader is finally catching up with the fundamental traders and investors. Yes, it is really good.
He or she knows that the rollercoaster technical trading lifestyle has now ended. He or she is now ready to trade the financial markets by combining the technical and fundamental analysis. He or she understands that he or she can only become a better technical trader when he uses both.
Please share and bookmark this article if it is really useful to you. I will really appreciate it. Please post relevant questions and comments at 24stocktrader YouTube channel and in due course I will get back to you.
I wish you the very best. Happy Trading To All
This article is written by George Beaulieu founder of Stochastic-macd.com