The status of technical analysis has always been controversial in the trading business. Some people regard technical analysis as the treasure of the industry, while others think that technical analysis is useless. There are different opinions, and it is difficult to convince the public. In my opinion, technical analysis is only a tool for traders to observe the market, and there is no right or wrong. There is no perfect technical analysis in the market itself, and there are only analysis methods suitable for you.
Stage 1: Desire for technical knowledge, delusion of getting rich quick
New to the trading market, deeply impressed by the huge profits of financial transactions, delusional to get rich quickly through massive learning. Basically a phase that all traders go through. In the face of novel industries, there is a strong curiosity. Whether it is books such as "Japanese Candle Chart Technology" or "Futures Technical Analysis", or various learning media such as QQ groups and forum websites. As long as it can help traders enter the market quickly, all comers will be welcome, and they will be immersed in the ocean of knowledge and cannot extricate themselves. The learning path is also roughly the same:
①.Price form. Single K-line form (hammer line, hanging man, cross star, etc.) ---> K-line combination form (bullish engulfing, bearish engulfing, morning star, evening star) ---> K-line structure (M top W Bottom, Head-Shoulders Top, Head-Shoulders Bottom, etc.).
②.Usage of various indicators: MACD indicator (Glanville's eight rules) ---> MA moving average ---> RSI and other oscillating indicators.
③. Combined use of technical indicators. K-line + MA+MACD indicator combination ---> K-line + MA+RSI indicator combination ---> BOLL+KDJ+... and other combinations of various indicators.
④.Looking for new indicator combinations + particularly favoring new indicators that do not come with the system.
Traders at this stage devote a lot of time and energy to finding the perfect trend and entry signals. When a new book or technical indicator comes into view, it is like a treasure, trying to turn things around. It has been constantly seeking new transaction analysis techniques, and the cycle repeats.
Stage 2: The concept of trading and the idea of building a trading system have begun to germinate
Traders are exhausted physically and mentally in the process of finding analytical techniques. A large number of people stop at the first stage, while the other part of those who persist has lost their initial sharpness and gradually shifted from technical analysis to research on trading concepts. Trying to start from the trading concept, build your own trading system, and gradually understand: trading has never been an industry where you can get rich quickly. Start trying to build your own trading philosophy and trading system. So far, the trader has returned to the relatively correct trading dimension.
Although the road is bright, it is still difficult.
①.Know yourself. What kind of transaction is suitable for you.
②.Know the market. What is the market, what is the nature of the transaction, and how does the price work.
③. Recognize trends. What is a trend, what is your own standard for judging the trend.
④. Entry and exit signals. The basis for entry, the state of holding, and the basis for exit.
⑤. Fund management. How to make reasonable use of account funds and how to reduce transaction risks.
⑥. Post transaction management. Trading experience and lessons learned.
⑦......
Start to build a trading system that suits you from the trading details.
Phase 3. Believe and implement the trading system, improve the trading system
Traders at this stage already have their own trading system. The focus of trading has changed from looking for signals at the beginning to the current implementation. The trading mode is relatively fixed. When I open the board every day, I can clearly know what to do, and I am very familiar with the trading procedures. This stage is more about firm trading, especially the training of trading mentality. Continue to exercise your ability to control funds. Although the trading curve fluctuates, it is generally in a positive return expectation.
Stage 4. Trading as usual, no surprises
This may also be the trading state that traders yearn for the most. They have their own insights when facing the market; they have a familiar trading process when facing transactions. The profit and loss of the account no longer disturbs the mind, and everything is under control.
Huichacha’s message to foreign exchange traders: Trading is a part of life, not the whole of life. Be grateful for life and love life.
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