I have heard people lament how difficult it was to perform technical analysis and how they can never learn the skills. There were also many critics or fundamental believers that the stock market can never be timed and that we market technicians are wasting our time trying to beat the market using technical analysis. Technical analysis was thought to be a study of past price behaviors and critics were saying the past doesn't reflect what will happen in the future. They are both right and wrong. They are right because technical analysis is not a crystal ball where it is 100% accurate. They are wrong because technical analysis reflects the human emotions happening on the charts. Do human change over the centuries? As far as emotions are concerned, fear and greed are human nature that will never change! Humans will still do insider trading even if it is illegal due to greed. We saw how corporate governance though tightened over the decades was not fool proof to these criminals. Humans will still fear losing paper profits and they will still fear declining stock prices leading to declining capital. All these emotions can be found on the charts as they happen. Ask yourself, how many times have you seen a stock price run up before news is released? Anticipation of shareholders? Well, maybe but how about insider leaking the news? Think about it.
Every night I study in details charts and it is through all these relentless efforts that I became very familiar with technical analysis. If a lawyer wants to win a case, he will study the case carefully and also refer to past cases. We all know lawyers earn big money, but it is really this hard work of preparation that justifies their huge pay. As a trader, we cannot slack too. Hard work and efforts must be put in to learn technical analysis. Long hours of studying these charts will enable us to be very proficient in chart reading and recognize buy or sell signal in a flash as the experience build up. There is no shortcut to success in trading as far as I'm concerned.
I started trading as a loser and often times am only interested to know which the next stock to buy is. This is not why legends made their fortune in the stock market. Every single book that I read, advocate us to study past charts and get familiar with all the chart patterns or price/volume relationship. Hence why shouldn't we follow? After all, they are the ones who have done it and been there.
Remember, human nature never changed and this is the fundamental reason why technical analysis will work.
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Yours truly,
Decipher
Author of http://growmoney.blogspot.com
http://growmoney.blospot.com where my trading journey never ends
Welcome to my trading journal! A place where I share my Psychology, Money Management & Trading system on trading shares in the Singapore Stock Market. Fellow shares enthusiasts are welcomed to share thoughts too. I hope my posts will be educational to you in your quest to "grow money"
Decipher,
The Art Of Growing Money
http://growmoney.blospot.com where my trading journey never ends
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