Ten lessons from my book “The Ultimate Guide to Technical Analysis”
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“Technical analysis is the trading of price action, while fundamental analysis is the trading of value. These are vastly different things.”
“Technical analysis focuses only on price action & volume. The best use of TA is not the prediction of future price. It should be used to identify the path of least resistance, quantify the probabilities of what will happen next & identify a price of entry for a good R/R ratio.”
“Fundamentals can tell you what to buy and technical analysis can tell you when to buy and sell it.”
Fundamentals = Current and future value.
Price = Current buying and selling reality.
“Technical Analysis alone is meaningless outside the parameters of a complete trading system. A trader needs proper position sizing, a trading watchlist, a strategy with an edge and the discipline and perseverance to stick to their trading rules.”
“An area of supply is a price zone where many traders and investors are holding a stock and willing to sell it and exit their position. Overhead resistance is created when people sell to lock in their gains at their profit target levels.”
“Support and resistance levels are not an exact price to watch, rather it’s a zone of prices. The longer a chart trades in a price range the more valid the areas become. Also, the longer the price range the more powerful the eventual breakout can be.”
A breakaway gap is one of the biggest momentum signals indicating the beginning of a new trend or continuation of a trend already taking place. This move must happen as a breakout of a trading range to be valid, & a break to all-time highs or all-time lows is the strongest signal
“A gap in price that doesn’t get filled in the first hour of the trading day tends to keep going in the direction of the gap, most of the time for the remainder of the day.”
“Discipline is what makes it possible for a trader to allow their edge to play out over time and lead to profitability.”
Atomic Habits: An Easy & Proven Way to Build Good Habits & Break Bad Ones by James Clear:
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“Every action you take is a vote for the type of person you wish to become. No single instance will transform your beliefs, but as the votes build up, so does the evidence of your new identity.”
“You do not rise to the level of your goals. You fall to the level of your systems.”
10 lessons from “The Psychology of Money” by Morgan Housel
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“Spending money to show people how much money you have is the fastest way to have less money.”
“Someone driving a $100,000 car might be wealthy. But the only data point you have about their wealth is that they have $100,000 less than they did before they bought the car (or $100,000 more in debt). That’s all you know about them.”
Ten lessons from my book: “The Ultimate Trading Risk Management Guide”
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“The biggest mistake you can make in risk management is finding yourself on the wrong side of a trend with a large position size, stubbornly letting it continue to run against you without exiting. If you don’t know what to do in a market the safest thing to do is to go to cash.”
“Trades must be asymmetric; the downside risk is carefully planned and managed, but the upside profits are open-ended. This is a critical part of trading success.”
10 lessons from the book: “How I Made $2,000,000 in the Stock Market” by Nicolas Darvas
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“There are no good or bad stocks, there are only rising and falling stocks.”
“I did not know it but I was already coming up against one of the great pitfalls of the small operator—the almost insoluble problem of when to enter the market.”
His answer was to entry on breakouts of momentum to the upside in stocks in uptrends.
Ten lessons from my book: “The Ultimate Guide to Candlestick Chart Patterns”
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The larger the candle, the higher the volatility of price action, and the smaller a candle is, the tighter a trading range has become. Increasing candle size indicates expanding volatility, while candles getting smaller shows contracting volatility.
Hammers have a higher probability of being a valid reversal signal when found inside a chart trending downward.