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Part III - Don't Get Trapped in T.A.

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Part III - Index

STATEMENT

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Technical analysis might work in the short term. But just because you got lucky a few times in a row doesn’t mean you found something valid. Some proprietary firms do use technical analysis and it works, until it doesn’t work. And boy they will sure let you know when it stops working and you lose them money!

You see that cup and handle pattern on your chart? That’s right you don’t because it doesn’t truly fit the description of a cup and handle pattern. The cup should be U-shaped, not V-shape. And the cup must have a handle on the right-hand side. And the handle must form in the upper half of the cup. And the cup rims should be near the same price, but you can be flexible with this…. c’mon, when written down, this sounds ridiculous doesn’t it? Cup and handle? Come on. Please.

Confession Time
When I first started trading, I read as much about technical analysis that I could lay my hands on. I studied chart patterns, pivot points, Fibonacci levels, candlesticks, Elliott wave, ugly patterns, busted patterns - you name it, I read about it and tested it. I never actually did trade using them because although there is always a grey fog in front of us whilst trading, but this felt more like a black smog


Making Money Isn’t That Easy
Technical analysis can perhaps make you money, but just because someone says something works doesn’t mean it works. And just because a collective of people say it works doesn’t mean it works.

Making money trading is difficult, tedious, stressful and requires an extreme amount of work. You can’t make money consistently with technical analysis. And consistency in trading is one of the most important functions we need to master.