Beginner's Orientation- Sharing Experiences On Technical Analysis Two Day Seminar

Recently I attended a two day seminar on Technical analysis. I would like to share my experience( Traderji too has requested)

I had read 3-4 books on Technical analysis before the Seminar. I think the most important thing about the seminar from the perspective of a beginner is the emphasis and the sequence of usage of TA tools. They began by emphaisisng on one's own observation. It began with bar-reversals which I did not know was so important as it was only in one book. Traderji can probably explain the basics better through diagrams but the finer point was that an upward bar reversal has relevance only if preceded by a downward trend and vice-versa.


Then the importance of Gaps which again for some strange reason I did not read. The finer point I remember is that even the experts find it difficult to distiguish between exhaustion and runaway gaps.


A basic general principle was that once you master the principles of technical analysis- they remain the same for everything be is intraday or other type of trading only the time frame is different.


They obviously covered moving averages, supports and resistance, trend reversals and indicators very well(for 2days). I was not so satisfied with the coverage of continuation patterns. Eliot waves and Derivatives were convered in the end. Again, I have read 3-4 books on derivatives also and I am not satisfied.


There is another person in Delhi who is going to conduct a one day seminar. I feel that such workshops are for people who are already into trading either because of professional exposure or hobby and need some formal finetuning. For a pure beginner,it is like reading one more book that gives a good basic direction. How can one become a skilled trader in two days? Perhaps traderji would like to comment.


If I were to do the seminar, I would to it at a business centre with computers for everybody for 5 days:-

Day one- Trends and Channels, supports and Reistnace, Moving Averages and Bar Reversals- Followed by practicals by the students on computers(SOC) and live trading experiences(LTE).
Day Two- Trend Reversals and Contiunation patterns followed by soc and LTE
DaY Three- Major oscillators/ indicators followed by SOC and LTE- Some insight into how to build one's own oscillator.
Day Four- Applications like Derivatives and commodity futures or others follwed by SOC,LTE
Day five- Final combination with proper theory and practical exams to ensure what is learnt is digested.

Traderji's comments on the above? Since SOC and LTE in an expert's presence were totally absent, one could not get a proper insight into metastock. I can also conduct a two day seminar on fundamental analysis but I cannot imagine doing so without giving hands on experience on the computer on the best software. I have even written to equis why they don't try to create metastock professionals just the way we have Tally graduates and there microsoft certified professionals.

Some of these observations proved true when the next day I came across www.tradingacademy.com where they have a seven day instead of a five day course but by Indian Standards is extremely expensive. I would suggest beginners to listen to their free online courses like the "Seven pillars of Trading".

Considering how much the academycharges, I got a good value for money but I think that to be a skilled trader, this was an orientation and not training. They had excellent points in transparencies the photocopies of which they did not give. It is difficult for a beginner to hear somebody in one area and read in another area and take notes at the same time.

concluding, let me share the best thing I learnt. In India, Sitar is an instrument

S-Support
I-Indicator
t-Trends
a-Averages
r-Resistance

This is what one is supposed to study but before that:-

Inside Bar
Rversal Bar
Gaps
Volumes
Primary

Traderji's comments on the above. I know there is no definite sequence but this is a good sort of direction.

I request traderji's comments on one partiular issue. Is trading so simple that after giving an orientation, one can afford not to monitor. For instance can I start drawing continuation patterns, supports and Resistances etc and others correctly. Should not an expert monitor that it is being done correctly. Is metastock also so simple that it does not require any practical training.

I think beginners should either go the whole hog since money is involved or avoid such seminars. Very few people know about professional trading in India. It could be a good dormant market provided the right kind of training is provided. Even with metastock, I feel like an untrained soldier with a very good weapon which can prove counterproductive.

Being successful at trading involves tremendous amount of dedication, motivation, patience and discipline apart from a voracious appetite for reading and and of course a certain amount of trading capital to pay for losses (akin to tution fees) in the markets.

Most beginners end up losing their entire trading capital within their first year of trading.

When they start out, most beginners are extremely excited. They dream of success and the recognition that huge profits will bring. Some achieve early success, but many soon discover that achieving consistent profitability is elusive. Many are drawn to trading, but few can trade profitability. The winning trader is a special breed, a person who is highly motivated, but at the same time, he or she is realistic and able to persist in the face of adversity.

It's easy to get yourself "psyched up" when you first start out trading: One can merely convince himself or herself, "All I have to do is apply myself and I'll achieve profitability." This can often be a useful positive attitude, but the "power of positive thinking" doesn't usually go very far in terms of achieving trading success. It makes you feel good in the short term, but then you find that mere hard work and persistence doesn't pay off.

To be successful it is necessary to use sound trading strategies, expose yourself to a variety of market conditions, and hone your trading skills. Successful trading requires talent, and there's no way to develop one's talents without extensive practice (which involves losing money in the process).

Although a positive attitude is useful, a healthy skepticism is paramount. When it comes to trading, you can't believe anything your read or hear. Even when a so called professional at a seminar teaches you the "conventional wisdom," it is essential to remember that so-called conventional wisdom is true only when it is true; it is false the rest of the time.

History in the markets only repeats itself when it does. And the only time you actually know that you've stumbled upon a profitable trading strategy is when it, indeed, produces a profit. Convincing yourself you can master the markets with sheer determination and willpower isn't going to get you very far. You must accept the fact that, in the end, trading is like a game.

You've got to take it seriously on the one hand, but learn to enjoy the process on the other. Traders take the game seriously in that they acknowledge that real money is on the line and it is likely that real losses can wipe out one's trading account. They address this issue through risk management. On the other hand, they know that no trading strategy is foolproof. They realize that despite all their efforts, it is quite possible that some unforeseen adverse event can go against their trade, or that market conditions may just not be conducive to one's trading plan.

That's where a happy-go-lucky attitude is useful. It is vital to view trading like a sport. If you score the winning point, fine. But if you miss it, don't get too bogged down. Just pick yourself up and try again. Eventually, with enough practice and experience, many novices will move into the realm of the seasoned professional. It is not going to happen over night, however. It will take time and practice. That's where the motivation comes in.

It is easy to stay motivated for a short time, if you think the payoff will be large and relatively immediate. But trading is a profession where years can go by with little progress.

It takes several years to achieve consistent profitability. Over the years, a great deal of money will be spent on commissions, losses, books, software and other instructional materials.

The would-be professional trader isn't fazed by it all, though. He or she views the money spent on trading as similar to what any professional spends on college tuition. He or she believes that eventually, his or her time and effort will pay off.

The winning trader is highly motivated. He or she admits that trading is a challenge and that success is far from assured. Despite this harsh reality, the winning trader persists until he or she achieves consistent profitability.

Although you have not replied specifically, I am not complaining because you have given plenty of practical insights on training. From what you have written, one can conclude broadly that a two day seminar is grossly inadequate.

If I were to say that after a one week course with live trading sessions,there should be at least three weeks of apprenticeship with a pro- it could be derivatives,commodites everything-Would not something like this be ideal?

Since you have yourself explained that trading takes time to master, I would request one good example of each of the basics- if price objective can be explained nothing like it.

One way to learn how to trade correctly is to find a successful trader (mentor) and have him or her teach you exactly how they do it. So a course followed by a live trading experience would be great!

However, this is not guaranteed to make you a successful trader. You might not have the capital necessary to trade the way they do. You would definitely not have the years of experience they had developing their successful approach. You might not have the personality profile necessary to execute their style of trading.

Another way to learn is by trial and error. This can be done by applying what you have read and learnt in the markets using REAL MONEY! This is the method of choice for most people although they probably don't realize it.

The most obvious and practical way to learn how to trade correctly is to read books. Find the best books by the most respected authors and the best traders and learn from them. This will expose you to ideas of other professional traders and the way they think and react under different market conditions.

Finally learning to trade is a combination of being exposed to ideas plus practical experience watching the markets on a day-to-day basis. This is not something that can happen in only a few weeks. Professional trader and money manager Russell Sands describes the makeup of a successful trader: "Intelligence alone does not make a great trader. Success is equal parts of intellect, applied psychology, practice, discipline, bankroll, self-understanding and emotional control."

To be successful you don't have to invent some complex approach that only a nuclear physicist could understand. In fact, successful trading plans tend to be simple. They follow the general principles of correct trading in a more or less unique way.

This says it ALL!!!

However I had to learn the DIFFICULT & EXPENSIVE Way!!!

What you have written is very interesting especially the mentor and psychology part. No matter how good books are I don't think one can do without a mentor for practical insights.


I am keen to know one thing - This bit about 95% failing in the first year. Can one look upon trading as a full time profession right from the beginning or should one proceed from part time to full time? To avoid what those 95% experience let's have your views on the following:-



I don't like to risk more than 2% of the account equity on any single trade

Look for a 3-1 profit objective.

Obviously the bigger risk you take when you trade, the bigger the reward if you're right. But equally, the smaller you trade, the less chance you will go bust," says Sands. The Turtle philosophy is to trade many times as small as possible in order to stay trading forever. This is important, says Sands, because 60 to 70 per cent of the time the identified trends fizzle out and traders wind up losing a small amount of money. The compensation comes when a solid trend is identified which rewards the trader handsomely. "Maybe 30 per cent of the time you are right and when I win with Turtle I can make between five to 10 times what I've previously lost," claims Sands.

By the same token, traders find it hard to resist taking profits too fast. One of the most successful big traders in the currency and interest-rate markets says that he expects that 70 percent of his trades will be losers. But when he loses he loses small, and when he wins he wins big. Others who work in his trading room will say that they are profitable on 70 percent of their trades-but most of them lose money, because they grab for small winnings.
He thought the best discipline for young traders was "spreading"-taking long positions in one contract against short positions in another, to exploit changes in relative prices that would disappear as normal patterns reasserted themselves.

You should never be willing to let a position go against you by more than 8%. Remember, all stock are bad, unless they go up. Cut your losses at 8% and move on.
If your are disciplined enough to cut losses at 8% while taking profits at 20% - 25%, you can't possibly lose money over time as this law of mathematics cannot be broken. with these two simple rules, you can lose three times and win only once and still not get into financial trouble. Now, if you can't produce 1 winning trade out of every 3, you don't belong in the market

Once you're up 6% or more, decide never to be down in that position again.
Once you have a 15% gain and you have moved your stop to protect 10% of your profits, determine the exact price at which you will sell at least 1/2 of your position. . The remaining half can stay in as long as the stock stays above it's 50 period simple moving average (sum of last 50 closing prices divided by 50).
Winners cut their losses short and move on to the next winning trade. Losers hold on to falling stocks 1/4 point by 1/4 point until the very ability to make a rational decision has been zapped from their bodies


Needless to mention, you can add what you want to.

Have you read this interesting article on stop loss

Every trader should have a risk management strategy.

I read the article. I think there is some mistake because it is more on short selling than stop losses.


I would have appreciated a more specific reply to some of the numerical queries like booking profits at 25% and stop loss at 8% is a safe bet or not in your view.


Is it possible to shorten my name? If so how?

I have corrected the link. Sorry for the typo error.

The stop loss article has some very good insights. Can't you explain trailing losses(buying and selling) in detail.