How to become better at Technical Analysis?

[hekktor]

Just my 2 cents. To be good at something, you have to specialize or concentrate on a few things. Here you are trying to learn which is fine but, as someone already noted, you are all over the place. Just my guess, you are mixing time frames, mixing different strategies, fundamental and technical analysis based strategies. It will just confuse you and waste precious time. First determine what you would like to trade, crypto, forex, stocks, options, ETFs, IPOs, etc. Then, select a time frame that you favor. I was never good at day trading when I tried it. However, swing trading and trend following is what worked for me. Once, you have chosen a time frame, day trading, swing trading, trend following---focus your attention to trying to learn how to read stockcharts (technical analysis) properly. Then, add risk management and proper position sizing. Work on developing a trading system. Backtest that trading system. It must have an edge or positive expectation or you are not going to succeed. Do all these things right and your chances are 10 times better than the average retail trader who is just guessing, following other ill informed traders like them, listening to CNBC and Bloomberg, etc. None of those work.

Thank you so much for this, I really need to hear this over and over again. I think I've been a sponge for quite some time, so I need to decide which one to pursue now and master it well. Appreciate it!

 

[hekktor]

You might be a good fit for the CMT program it gives a broad overview of TA subjects and you could pick which path to go from there. For example I did the program about 10 years ago and it led me to quantum/systematic trading since that works is what resonated with me but you could be different. Everyone is different that’s part of the eureka moment, finding what fits with your beliefs and personality

Thanks! I'll have a look at this.

 

[hekktor]

Just keep reading and researching. You need to do a lot of backtests until you find something. There is no shortcut as you find your strategy which fits for you personally. There are many good strategies around, but you also need to define your trading universe, whether you want to trade stocks, futures or something else.

Agree! I've been doing backtests continuously, though I am not sure how to properly quantify what a good enough positive expectation is. Like there's always more to test, and I usually end into that spiral of making backtests more and more complex.

I also doubt myself at times, and is constantly bugged by shiny new objects, instruments, and tools. As one person mentioned above, I'm kinda all over the place, and I need to be more intentional and specific this time.

Hearing yours and others' comments on how to keep it simple and focused help a lot. Will keep on testing until I find what works for me

 

[hekktor]

I think you must adjust your tools to your assignment. Do you targeting to 10% with 500K or 500 per day with 50K. It's totally different approach.

I'll start paper trading, and I won't be putting in a large capital for now until I get it right. I also read about trading sufficiently large $-volume assets when starting out, so I'll stick with those first.

Hopefully I won't run into liquidity-related issues but thanks for the tip!

 

[hekktor]

There is software for such... Wave59. I looked at it years ago.

The basic premise at that time... (1) 9 variables, and (2) when a net of 5 of them are positive, it's a buy. When a net of 5 are negative, it's a sell.

Not my favored way for TA, but it's a thing.

And then there is the "universal" Price TA. Works in all time frames, works in all markets...

"Buy Support
Sell Resistance
Chase Breakouts"

KISS, baby!

That's it.

I tried backtesting something like this, e.g. when 3 out of 5 indicators are hit, etc. It's very complex to test, so I did not go further until I have a good automation platform to test combinations.

I like that simple approach though! For sure easier said than done, so I need to practice some more.

 

[TrAndy2022]

It also makes sense into latest computer hardware. When you have a kind of double platinum xeon processor with at least 128 GB RAM and fast harddisks you can save a lot of time when you do your backtests. More computing power can help you a lot when doing research and backtests. That money invested here is a very good investment in your time.

 

[Scataphagos]

I tried backtesting something like this, e.g. when 3 out of 5 indicators are hit, etc. It's very complex to test, so I did not go further until I have a good automation platform to test combinations.

I like that simple approach though! For sure easier said than done, so I need to practice some more.

Yeah, well that's why I didn't go for Wave59. Though "computer does it all" except place your trades, it bothered for its complexity.

Here's what you do...

Get a basic book on TA. Learn about "Support" and "Resistance". That's all you need. Simple to understand. Lots of trader wannabes poo-poo TA, but they don't understand. (And ETers don't want to listen to me, I think, because I say it's simple and they don't believe it.)

I looked over the entire thread. Almost everything said, except for my posts, is either misdirecting or entirely wrong. One exception was YOUR statement... "Before I would usually backtest using previous lows as stop losses, and reward-risk ratios based on them." You were using "support" consideration as a stop loss. That is correct Price TA strategy!

 

[Sekiyo]

You study history.
Go through a thousand setups,
Across all possible place and time.
Become the master of, at least, one setup.

 

[Leob]

I'll start paper trading, and I won't be putting in a large capital for now until I get it right. I also read about trading sufficiently large $-volume assets when starting out, so I'll stick with those first.

Hopefully I won't run into liquidity-related issues but thanks for the tip!

In any case, you should start small, but your way of practice should be derived from your goals

 

[Scataphagos]

Become the master of, at least, one setup.

A trader could make a good living by being good at only one of the major "often occurring" setups. (Wouldn't do much to be good at only the 50 day and 200 day setups... they don't occur often enough.)