The great challenge for the new trader is finding sustainable success in their trading, quickly.
I’m not talking about melt your face off, life changing profits in six months kind of BS.
I’m talking about the base level, bread and butter type of trading knowledge that you can build upon. The kind of principles that you will leverage again and again for years to come.
I looked back at my beginnings and I can remember that I was obsessed with trying to interpret the charts.
I was looking for a safe place to enter a trade and not lose money. But I had no way to frame the movements of price on the chart.
At the time, I couldn’t understand how other traders were able to anticipate price movements.
What could they see that I couldn’t?
For a long time I thought there was some secret knowledge, that they would often allude to but never fully reveal.
Some time later I realised that their great secret was perspective.
They couldn’t be sure what was going to happen next but they could see the clues.
The arrangement of price behaviour gave them clues that they had seen before.
I came to accept that I had to do the work that they had done if I wanted the ability that they had.
For days I looked at the chart and eventually I asked myself a simple question.
At what point would it have served me well to get in, and I marked those points on the chart.
They were at points where price had bottomed and had started to trend back up.
( well obviously )
How this happens takes a few forms.
Meaning, that the price doesn’t always follow the same path but the principle was essentially the same. Price goes down, stops going down, then price goes back up again.
OK, cool. This is as good a starting point as any.
I encourage you to open up the BTC chart on the weekly timeframe and have a quick look at where it would have been beneficial to put on a trade.
You will notice that some of the price patterns look something like the ones I show below. At least in principle.
Now, here is a key lesson that I want you to remember:
As traders we are looking to trade from either a break in trend or a continuation of trend.
In its simplest form, thats what trading is all about.
I want to point this out so you realise that, regardless of all of the complexities, the job of trading is motivated by these two things.
The first image shows a break in trend and the second is a break in structure.
Break of Trend
Break of Structure
Together they provided a lot of solid opportunities for good trades. And finding opportunity is the name of the game.
Now that you have a clue on what opportunity looks like you should go back to the BTC chart on the daily timeframe and roughly mark out the breaks in structure and trend that you can see.
Spend the next week or two studying these structures and consider how they could have been traded in the past.
Do printouts, take notes, make assumptions and then challenge those assumptions. Geek out on the process.
Success in trading depends on doing the homework. Becoming familiar with basic behaviours.
There are no quick answers to the whole puzzle.
You have to learn how to identify the different types of clues and know them so well that you can anticipate them showing up on the chart.
It takes a lot of experience and that is how good traders are able to anticipate the market. Not by secret tricks or insider information but from experience.
By doing the above exercise you will notice that you have gained perspective to some of the price action on the chart.
The more you keep building on a solid foundation of knowledge the more the charts will speak to you.