Are You Still Using Chart Patterns and Technical Analysis?

Are you still looking for trades, trying to find the right positions to take in the markets with chart patterns with technical analysis?

I’ve got an analogy that is going to help improve your trading. I’m at the beach, and this is what trading with chat patterns is like. It’s like taking a kid to the beach, finding a big pile of rocks and shells, and sorting through it. While looking at each rock or shell, you pick which ones you like or don’t like and which ones you like to take home. This is the process of manually looking at charts and technical analysis in a discretion way. In contrast, if you trade systematically, you can get some dramatic improvement and performance, reduce the amount of time your trading takes, and have a much higher quality outcome.

What you do, the equivalent sort of approach with systematic trading, is you come to the beach and have a machine that automatically picks up all the rocks and shells and sorts through them all at once in a systematic way, without your human involvement. It picks out the ones that meet your criteria, and they’re the ones that you take home with you or the ones that you put into your account, given that you’re trading. This dramatically reduces the amount of time and mistakes that you make. It also reduces the amount of learning required to succeed because once you learn the rules of the system and how to follow the system, there’s no more judgment required about “Does this trade meet the criteria of the system?”

This is the key because most discretionary chart traders early on lose money over and over again. And have to do course after course and get mentoring for a long period of time to try and get successful. Why is this? Because there’s judgment required to determine whether or not it’s a good trade. In systematic trading, it’s the system that does the judging for you, so it’s not up to your experience or how well you evaluate each shell on the beach to figure out whether it’s a good one and whether it’s worth taking home with you. It’s all about, “Do you know which buttons to press? Do you know how to run the system in your software? Do you know how to update your data?” These are much, much simpler things to do.

If you’re still trading using chart pattern analysis, discretionary analysis, or using indicators, it’s time to take the step into systematic trading. It will reduce the amount of time you have to spend on your trading and increase consistency. In addition, it’ll reduce your stress and increase the number of good trades you can find because you can scan the entire market in the blink of an eye once you’ve got the systems set up in your trading software.

If you’re not yet trading systematically and want to learn how, leave a comment below, and I’ll show you how to get started.