If you trade long enough, you will notice ego being talked about a lot, whether it’s through trading blogs, podcasts, videos or books; ego will pop up. You might even start to ponder if your ego (we all have egos) poses a problem to your trading and so you might try to find out more on it like I did. Ego and trading is what I’m going to write about in today’s post.
There are some nuisances that come with trading that might make your trading journey hard, and it might be better to accept rather than trying to fight it. If you can’t accept the fact that anything can happen in a market for instance, I do believe that you’ll find your journey in trading might come with some struggles – that’s more so than the other traders who do accept it – and the sooner you accept it, the easier you might make said journey.
In this post I will be discussing one of the most well known and widely recognized patterns in classical charting known as the head and shoulders pattern. It is mainly known as a reversal pattern but some technical analysts also use it as a continuation pattern so I will be discussing both here.
I went short USDCAD sometime during February 2020 for various reasons (the specific dates and reasons are not important for this post) and was stopped out towards the end of that same month for a small loss.
Support and resistance is very popular when it comes to trading, so in this post I will explain the very basics of support and resistance.
When it comes down to someone’s trading / investing strategy, it will in general come down to either a fundamental / economic analysis approach or a technical analysis approach. With fundamental / economic analysis I mean a trader / investor analysing a company using its financial data (to invest in stocks), or maybe general market conditions for the stock market / commodities / interest rates, bonds, forex, politics to come to a decision as to in what products (of which there are many)to invest / trade. I don’t want to write much more about fundamental / economic analysis but I hope that you at least get the idea, and I actually want to get to the part of technical analysis of which this post is actually about.
When I started getting interested in trading, (how I got interested is another story) a friend of a friend (who was more into investing than trading) advised me to start by reading the financial portion of the newspaper daily as well as trading books before I started this endeavour of trading just to be sure it’s something I truly wanted to pursue. He also did not hide the fact that trading was very difficult which I guess was sort of a blessing. That’s why I decided to read as many trading books (mostly technical analysis) as possible and also this one weekly financial magazine for close to a year before I started to trade. But during that same period I also started reading blogs / spent time online for systems to trade and that’s where I started seeing these courses / training and systems offering huge monthly returns. And so I started to believe that there is really big money to be made in trading. I remember making these rough calculations in my head like doubling my money every x months and taking out something every month (to live it up!) while still growing the account exponentially and so on.
At some point on our trading journey most of us will make trading mistakes that might wreak havoc on our psychology and naturally our trading account. I guess there are traders who started out with mentors (who’s been through it all), or at prop trading firms (or other businesses that have trading desks) where there are proper training and then those who made it all by themselves without too much stress / damage. For the most of traders though, the trading journey is a lonely one via the school of hard knocks and trial and error. The worst part is that most new traders never truly give trading enough of a chance to succeed as their expectations (big and easy money) at the start doesn’t match the reality (not so easy) of trading.