What Do You See?

Take a look at the chart below and take a moment to write down what you see in the chart.

What you see in this chart is a product of your knowledge and experience that you've gained in your life. For some of you who have never traded the markets before, what you might see is just a colourful graph which has no real meaning attached to it. Until you’re actually taught how to interpret these types of charts, it’s very hard for you to formulate an opinion on what to do. This is the same for when you first try any new skill in life. Take someone who has never felt snow before who’s heading to the mountain to ski for the first time. When they put on those skis they will feel very unconfident and won’t know what to do which will result in them falling to the ground over and over again. Until they are taught how to ski by someone who knows how to ski really well, they will continue to struggle.         

For those of you who already have market experience, you will start to formulate opinions on how the market has been trading and where you think it’s likely to go next. You’re view and analysis of the chart will be formulated using the skills which you have learnt from those people who have taught you to trade the markets. Trade with Precision clients will be likely to form similar opinions to each other about the chart as they have been taught how to read charts in the same precise way. Those of you who have learnt to trade the markets through other sources might have differing opinions on where the chart is likely to trade next. Our interpretation of charts is a direct result of what we have been taught about the markets along with our own experience gained from watching the markets.  

The important aspect about learning any new skill is to make sure you learn it from the right source. This ensures that when you view the chart shown above, you can be confident that what you are interpreting is knowledge which is actually going to help you gain an edge in the markets. So what would someone who’s been taught to trade the markets through Trade with Precision see in the chart above? Let’s run through some thoughts below...

1. Price is in a downtrend with clear momentum to the downside
2. The moving averages are fanning in the correct order
3. Price has pulled back into what we call the “sell zone” between the 10 and 20 period moving averages
4. Price is starting to rollover with bearish candles being broken to the downside
5. We might expect price to at least move lower to retest the 26.00 level

These are just a few quick observations which we might see in the chart. As you gain experience in the markets it might only take a glance at the chart to come up with all of these observations which help you put together reasons to trade this market. Now go back and compare these observations with your original observations and make some comparisons.

To learn more about how we approach the markets make sure you join our live webinars run each and every week.

Happy Trading!

The TWP Team