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Technical Analysis Dilemmas- Some Contemporary Thoughts

Plane photo

Plane photo

I would like to think that by now I am an intermediate level MT4 user. And although I read 20+ books on technical analysis, I still feel like a child when I open the platform from my broker and I browse through the tons of indicators showed there.
Of course, we are all looking for the Holy Grail of the technical analsysis – that single one indicator which, used constantly, produces permanent profits. It doesn’t matter how big the profits are, if they are constant they will provide huge profits eventually through the magic power of compounding.
But the more I read, the more skeptical I grow. Most of the successful investors had lives simillar to Edmund Hillary – lost several fingers (to read: dollars) before they climbed shortly the Everest of success. They are still successful investors and they still trade, yet, their life is not easy.
Below you can find several lessons from those investors, as I draw them from the books I keep reading:

1. There is no Holy Grail in investing
There is no single system which will make you tons of money. The trading game is a fast and furious one and if you stick long enough to survive, you will make money.

2. The trading game is a zero sum game
If you win some money, somebody else looses. Keep this in mind when trading!

3. Trading is a risky and stressful activity
If you cannot cope relaxed with the most catastrophic downfall of your funds, you might like to consider some other adrenaline rush activity.

4. Technical analysis works for you and for the broker too
Never forget that in a trading platform (such as the MT4) the broker can see all your moves. And he is watching for sure, trying to take out the zones where most S/L are!

5. Markets are unpredictable and large patterns occur yet periodically
Technical analysis is fascinating and you could spend ages reading about it. But at the end of the day, markets will invalidate any pattern.

I know I sound a bit disappointing for most of you folks. But if you want to be successful in any field, you need 1% talent and 99% sweat. Why would it be different here?

Blog originally published by in the fascinant year of 2010.

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