Part 1 How Do Losers Think – Technical Analysis Course

Here we are going to take a look at how losers think with our technical analysis course series.

The following was written by a famous poet – Tagore , “Pessimism is a form of mental dysomania. It distains healthy nourishment and indulges in the strong drink of denunciation and creates an artificial rejection which thirsts for a stronger draught”.

Lemmings that race to the ocean is what losers are like . They get caught by the traps of rejection and self denunciation and they want more ! Parents and relatives constantly bombarding kids with negatives through their lives makes it seem there is a conspiracy to create and keep an attitude of "can’t do" in people . Nearly all society continues this conditioning through commercials, pressure from friends and family, and music . A paper can’t be distributed , newscasts aren’t considered interesting unless you have misery and unpleasantness …. that which the loser is made of .

Misery is loved by losers – it is the only thing that makes him happy . Imagine that!

The trader that is a loser is a self defeatist . Stress and strain help him function best , and he feels right at home when he loses money. The loser who strikes gold in the market, literally falls apart … that isn’t what he is used to . He does not know how to enjoy success . His thoughts have always been built on struggling and losing . He wins, – he goes berserk – he becomes an expert – then ends up developing what one top futures trader (Larry Williams) called "the King Kong feeling". He quickly loses control, and then the profits disappear, and he goes back to the struggling and the misery – something he’s used to, – like lemmings to the sea , and he may not wish to admit it but he loves to struggle,- to struggle to win . His mind cannot cope with the winning itself . His mind can cop with struggle. Isn’t it amazing ? Especially if you take a look at it through a technical analysis course.

He links an immature posture . No wonder he is made a fool of by the amicable political candidate who assures the loser with "Look, don’t worry about your life. We’ll take care of it for you. We know better than you what is good for you" .

An desire to win that’s overwhelming is what the loser has. They tell themselves that winning can happen , and keep coming back determined to save face . In their psychological patterns ineffectualness is already programmed in. With success he becomes almost hypnotized by the events which then shower upon him . Mind hypnotism or a trance occurs to him. This and that gives him sinking feelings . He doesn’t wait to apply the things he did correctly , usually to the same market again, but at the wrong time . His mind basically tells him "This really isn’t happening" . He is unaware of where he is. He turns into another person.

[ It's always great to see a win occur to a loser, but because you see the trance they go into it is sad , and you know that they'll lose again within time - they'll lose so much that they'll be back at the place they started out.]

Sometimes when a profit does accrue , the loser’s mind will be so happy with the profit , that it will grab it prematurely . If there is a loss occurring, his mind says "It will all work out in the end" and they continue to hang on. He cuts profits short and allows losses to run on.

The market is hard to short for the budding trader . He thinks that prices have no ceiling and that the sky is the limit . As long as he buys against base zero, growth is inevitable , because in his mind life is all about growth and upward movement.

We will continue this discussion about how losers think in our next article in this technical analysis course series.

Part 2 How Do Losers Think – Technical Analysis Course

Let’s go on talking about how losers think with this technical analysis course series.

Going long in the market is something his mind has a fondness for . He thinks that it’s a good time to purchase if the prices fall . A price level trader is what a budding trader is, not a price movement trader. He doesn’t think about value movements, but in terms of value . When there are declines, he buys .

In the market, everyday logic doesn’t work . Losers believe that their natural reactions are going to be correct . Usually the opposite will prove true . Natural reactions to new is wrong most of the time . A loser is attracted mentally to society’s negative news output. When there is ebullient excitement he has a knee jerk reaction . He will slip into the market with the news rather than against it . He can’t keep from becoming fascinated with publicized bullish and bearish events . Dull markets just don’t attract his mind. He always busy on emotion on up days . When a topping formation occurs, his herd instinct makes him purchase on the first reaction , simply because of the "cheap" price – simply because his mind says the price is cheap .

His mind gets so taken away with struggling and misery , that it becomes chained and entrapped in its own inertia . This person has never learned how to think using a technical analysis course.

The losers mind does not think . It doesn’t think, although it’s supposed to. The mind is entrapped by emotion. The mind’s processes become overwhelmed by unawareness, fear, insecurity, and greed. Sociologists claim that 85% of all the people on planet earth do not think . Of the remaining 15%, 13% think they think and the remaining 2% think . Can you believe it? Only 2% of people in the world really think ! Being bright or stupid has nothing to do with it . Stupid people can think but they don’t ! An interesting corollary here is that the 2% thinkers actually approximate the percentage of commodity traders who are consistently successful year after year . The 2% of thinkers, know their market, price movements, reactions to factors, and more, and are well-disciplined, almost bored, without fear/ and know the game in the spirit of fair, good and bad bets . Those who think that they think , involve themselves with all the technical wiggle-waggles of chart formations . They become a pro at trading – especially when they have a recent but short lived success and they feel they have the holy grail that will keep them being successful . At the back of his mind is fear, – insecurity , – all the behavioral patterns that are non productive that have been engrained into them for years . They lurk around and he knows they are still there. And then there is a leap of the market that grabs him, and his roots are shaken.

Without thinking , Mr. 13% ends up back with the other 85% that don’t think. He has the idea that there is some conspiracy against him, by everyone, from the market to the floor traders. He feels this experience, rather than thinking about it . Fear, fear of the future, uncertainties, worries, insecurities , eliminate all rational and he without thinking exposes himself, – to risk, to plunging back into the market, biting the bullet , since an aggressive stance is what he feels, (Mr. Macho) that a profit will be returned by struggling, and he can start over with the profit .

( This is a guy who doesn’t want to take bad news home to his wife . Emotions grip him, during this event , just as occurred in the market place.)

It is sad, very sad . But the ratio of non thinkers to thinkers is not going to change .

In other discussions we have in the technical analysis course series we’ll look at the winner’s way of thinking .

Essential Maxims and More with Your Technical Analysis Course

A technical analysis course will help you learn That about anything can be justified with an old saying . There’s always a maxim that is plausible that seems to justify actions that are diametrically opposed. No matter what occurs maxims are always around to provide a description . Often traders decide to pick on that encourages their method of trading . It was stated by Orin Thevault that “selective perception” is what sociologists have called this . The trader is given some comfort with this alibi when he ends up having a loss or gets a profit that is smaller than he should have had.

Maxims are used as conventional wisdom by successful traders , that are overly general and have no predictive value and that have no place in a trading plan . He believes that success in trading requires more than than the right choice of a maxim.

“Nothing is so useless as a general maxim” .
– Thomas Babington
Lord – Macaulay – 1859

In theory , if a maxim was correct all the time it would be so used that its validity would be eliminated. Human nature is such that any valid maxims are broken with monotonous regularity . If we have a great maxim , it doesn ‘t mean very much does it ? Because most people will not pay any attention to it anyway . After all, you can’t remember everything . Perhaps Lord Macaulay was really right. There are some of those maxims out there, which can be applied in commodity trading. And, some of them are rather profound and should be committed to memory . Take you’re choice . Really , I suggest that you make you’re own collection of maxims that are good to you and test and question these maxims repeatedly.

ESSENTIAL MAXIMS TO KEEP IN MIND

The most effective approach to the objective of maximizing results is to play a favorable game in a small scale less desirable , but still providing a reasonable chance of success , is playing a game that is favorable on a scale that is large getting enough profits early on that ruin is avoided. Even an unfavorable game may yield profitable results if you bet heavy and seldom play . The road that will definitely end you up in a big disaster is going with an unfavorable game all the time. This can be learned by taking a technical analysis course.

A good sport dies without money .

There is no such thing as a sure thing.

A trader sleeps – markets do not .

Dialog is okay if enlightenment is the goal of both.

Accidental successes usually turn into accidental failures .

Positive and wnegative aspects are manifested in winning.

The many can’t accomplish what the few can do .

Take positions along the line of least resistance .

Sell famine / buy glut .

Sell news and buy rumors .

A bull and bear can both make money – a hog can’t .

Never buy at the bottom, and always sell too soon .

Purchase what isn’t going to fall in a bear market. Never buy something that won’t go up in a bull market .

Many reactions that were healthy have ended up fatal .

Look out for a trend where there is a one sided market opinion.

Patience is imporant . Wait for the times when it seems you can get unusually high profit .

Don’t trade often unless the plan you have requires you to often take positions.

There is hardly a maxim that someone could not find fault with .

Hoard half the profits you make .

It’s easier to make money than it is to keep it .

The race doesn’t always go to the swift or the battle to the strong, but that’s the way to bet .

PESSIMIST MAXIMS

If anything can go wrong, it will

No matter how great your results are, there is a person who will fake a better one.

Someone is always there to misinterpret your result, no matter what it is .

When data is collected, that figure that seems to be totally correct -is a mistake .

There’s always a way to get a wrong number, even if it’s impossible .

The path that leads to failure is broad .

FUZZY MAXIMS

Loss should be cut and profits should be let to run.

( this is like encouraging someone to be happy and stay healthy. )

On make purchases on down days. Only sell on days that are up.

Only the school of hard knocks teaches better than a technical analysis course.

Technical Analysis Course Describes Moving Averages

Many models have a foundation that is on a system of moving averages . Some are difficult and include many unknowns. Most models draw the bead on trend directions after it is manifested and as long as the trend doesn’t change will keep traders in this market . Some moving averages try to forsee trend changes . These ones can be lucrative to a good trader that can initiate a position that is recommended and can underlie more losing than winning trades .

A technical analysis course shows that the thought behind moving averages ( MA ) is figuring when the price direction differs from recent price averages. As long as the price average is lower than the current price of say the last ten, twenty or one hundred days the trend spins onwards . The average most often observed is the MA of closing prices for 10 days . The method’s benefit is that every day’s price is given equal weight . The MA assumes that traders put as much importance on the prices of last week as yesterday’s prices .

This does not conform to reality . A short term trader’s horizon is extremely limited . Commodity prices do vibrate more rapidly than the prices of most other investment forms , so, shorter series usually will do the best.

An ideal MA should :

1) quickly see a big turn in a price trend and not days later
2) the MA plot shouldn’t be so close to the daily prices plots that we would be whip-sawed in consolidation and minor swings .
3) this MA plot must be malleable to the volatility of the specific commodity.
4) if the commodity locks limit the MA plot should be responsive .

This approaches problem is that MA lines can be too lazy to show a reversal . Usually , the trading decisions of moving average technicians by changes that occur in the price market based on the line of MA. As the MA is more sensitive the smaller the amount and degree of the advance differential and the larger the number of sell and buy points , which leads to a lot of whip-saw and some small losses as learned in a technical analysis course.

You will find, as the time span is shorter, the more a trend termination of a reversal can be sensed by the MA. New trends will be acted on earlier and getting established doesn’t take as much time. Yet , the sensitivity is paid for by traders because, and to repeat , the shorter the moving average the greater is the number of trades that will be made with the addition of greater commissions to the whip-saw losses .

Therefore , moving averages has a delay in showing price trend turns. The delay is usually great than that which occurs when than what occurs with point and figure charting, P&L charting, and the simple charts. This position’s main benefit is that the each trend of substance has the user automatically put on board (as do all trend following systems .)  More information like this can be obtained from a technical analysis course.

Discussion of Different Trading Methods – Technical Analysis Course

Never in my life has something been seen like all these various methods which are coming on stream for the use in forecasting commodity prices . There are literally hundreds of techniques and approaches . This chapter will present rather briefly, but a few .

Some are conservative and I’ll put an asterisk by those I use personally . Listed in this chapter there are 36 mentioned ways of price forecasting . This doesn’t even include the various great tidbits that can be found with a technical analysis course.

(This author is very happy with P&L charting , for it lets this author on a daily basis and more be able to quantify price action. I know of no other system where the activity of the day is more important than congestion or trend in the way trading prices are going . Each day’s activity through the use of P&L charting shows congestion or trend evolution , often in just a day . )

Of course, , I’m frustrated by traders that think that their resistance index, moving averages, point and figure, volume oscillator , and who knows what all else , – cash and basis, – are the only system which is effective. And, that the system that they are using is the only one that will ever be effective and that they have no use for volume, open interest, seasonals, fundamentals, contrarian opinion, wave theories, point and figure, moving averages, oscillators, chart patterns, momentum indices, whatever , and seem to be blind to approaches evolved by others. ( Yes. I was able to get that out.)

These traders often don’t even use a system that is theirs and to me it seems, to be continually fighting the market .  Assuming a trader has studied a technical analysis course and has a trading plan incorporating several methods of forecasting prices and he puts them together in a way he can get trade profits on a regular basis , then this trader is worth listening to . In the planning section , the author will show his approaches to the market place and the flexibility may surprise you .

There are three basic methods to analyze the market behavior of commodity prices .

1. fundamental
2. mechanical
3. technical

FUNDAMENTAL

Often the market goes in the opposite direction of the fundamentals due to technical and other factors . Fundamental traders are interested in the price movements that are long range and must be prepared to wait it out . Fundamental traders may deny this, but there are just too many external factors to be taken into account , such as the natural response to fundamental influences , shown in fluctuations that occur each day. So for analysis, there is now reason to seek them out .

MECHANICAL

Mechanical methods use only price to determine what action to take and this action does not require any decision on the part of the trader . Three mechanical methods exist .

1. chart
2. computer summaries
3. moving averages

Going through a technical analysis course will teach these rigid trading rules to be followed faithfully and in most cases it’s based on a formula that is mathematical to give you the trading time that is right. A mathematical formula is used by the computer, which tells you want to do. One great thing about this method is they can be back checked . Computer based methods is usually biased toward the analysis of a mathematical trend, using various trading systems, like moving averages . The computer can read charts for you and all of the decision rules can be both formulated as well as tested.

TECHNICAL

Over the past years , a lot of work has been done to get technical tools in place , – all with the aim of anticipating futures prices from trading statistics , e.g. price, volume, O.I .

There are four broad areas of the technical approach .

• 1) patterns on price charts
• 2) methods that follow trends
• 3) character of market analysis
• 4) structural theories.

For charting, there are a variety of methods . Here are the most popular:

• a. daily high/low/close bar charts
• b. point and figure method
• c. moving average of closing prices

Technical analysis lists of various approaches can be cataloged by the following technical approaches .

• 1) board or tape reading
• 2) price charts being analyzed – which includes the following

• a. the price and its trends
• b. support and resistance
• c. consolidation ( continuation and reversal )
• d. price formations and patterns
• e. the measurement rules
• f. wave theory

• 3) volume and open interest analysis
• 4) other different technical indicators that may include :

• a. measure of the relative performance
• b. periodic price performance study
• c. study of opinion and contrary opinion

This will be discussed later .