Monday, October 19, 2009

What is Technical trader and Chartist all about Part 1.

I get this question all over anyone I have spoken to that most of the market entry point is decide by looking at the chart. They often confused that does we really need to follow all the candle formation and pattern derived from the chart for any trade set up ? Well frankly, to my experience the price does re-act very well to those patterns if you look at short-term basis, it would be significant if you can identified those patterns on higher time frame, i.e: Daily or Weekly charts. So, it would take a gut crunching and indisputable patience to wait for those trade set-up if you believe that you do not use to trade with the trend that is going to end pretty soon (if there is any, trend.).

Rule no. 1
Technical trading is about looking at bigger picture.
Hints: Always look for a bigger picture if you wish to trade with charts. If you trade on hourly chart, make sure that you zoom out in a multiple of 5 times of the charts, i.e: 5 hours,  daily and weekly charts.
So, check out this charts below:

 Lets take a test, what kind of trend can you see from daily FKLI chart ? If you say uptrend, you are absolutely right. But if you see the BIGGER picture, its just a mere 61.8% market rallied from the 2008 1,500 peak if you observe from weekly chart. You will able to see how many potential gains and losses you could made if you wish to enter the market from here. If you look and pay attention to the BIG FKLI picture above, you should be able to tell the duration of market cycle throughout the period from 1993 to present. Can you spot the the major downtrend, uptrend and consolidation ?

FCPO BIG picture:
Can you see where you were right now? Can you spot what kind of cycle we we going through ?
I will talk about Rule no.2 soon, stay tune.

Disclaimer: The information herein was obtained or derived from sources that we believe are reliable. No liability can be accepted for any loss that may arise from the use of this report. All opinions and estimates included in this report constitute our judgement as of this date and are subject to change without notice.


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