Hindsight is a wonderful tool to help explain technical analysis.
With it, we all can predict within a minute and a tic the exact times of turning points.
The moving averages can be explained, the pivots are all logical, and we can clearly see why something did what it did.
Making the call for directional trading is sexy and sophisticated.
Unfortunately, it’s not enough.
Take a look at the image representing “the system”.
Instinctively I knew that this was the right choice; thereÂ are so many items of symbolism that caught my eye.
This imageÂ perfectly captures the inherent beauty and paradox of the markets: hidden in plain sight is the action of the markets, minute by minute, hour by hour, and day by day.
Yet somehow there is always a reason to see thatÂ both sides have merit, that the market could go either way.
The trick is to make some money whenÂ our judgement isÂ right, and get out of the market. Period.
If we are going the wrong way, then take our stop out. Period.
That’s enough to compensate for our lack of clear vision.
Late day breakouts like today’s action steam roll hapless traders who cannot discern them. A well known wall st adage is that amateurs play the open and professionals play the close.
I continually remind myself that I want to play on the side of the professionals or I will soon be back in the minor leagues nursing some injuries to my portfolio.