Sunday, November 22, 2009

Technical Traders

I would like to share my understanding of Technical Trading.

In my opinion, technical trading requires the trader to understand market conditions and its psychology through his/her charts.  And the ability to analyze or in general we call Technical Analysis (TA) is done by learning the fundamentals of what is support and resistance, chart patterns, candle sticks formations, trend line and channels, Fibonacci and their applications.  More advance stuffs like harmonic patterns and Elliot waves are useful and powerful concepts to understand Price Action (PA).  Of course not forgetting indicators that are trying to describe the price movements.

Using my own yardsticks, if I were to categorize the types of technical traders, I would have the following categories

Signals - Traders that are overly focus in looking for entry signals (majority)
Levels - For those that have understood what is support and resistance, they would know how to trade the levels
Waves - For those who have more indepth understanding of the market, able to recognize wave movement and therefore possess the ability to follow development of the prices more closely

Below is a measurement of the components of skills with reference with the category of traders.  Of course, these are just my opinions.  Not meant to be used for any form of conclusive statements.  Each box is just a short description of how each type of traders would possibly use the components of skills.


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