Many people take technical analysis training programs eager to learn new methods that can help them pick that magic stock, get into that big trend, or finish a big step.

They follow the method presented by the presenter, paying particular attention to how the method should be applied with an eye fixated on the final result – always a win.

Yes, there is the stop loss to deal with the unfavorable outcome, and all that is for others. “Once I know this method,” they tell themselves, “my trading will all reach their profitable goals.”

There is another class: the reader. They used to read books, but now they read small, short descriptions on the Internet. After all, life has become faster, where is the time to read a book of several hundred pages. I can get it all in a two page description with two illustrations. And if I read about five of them, dammit, I’m already well-educated or even well-read!

The problem with both of the above sets – who intend to become a trader, mind you – is that they do what is considered ‘necessary action’, but without any understanding. The focus is on reaching the bottom line. This is so much like us, in real life, during a puja or fasting or visiting a temple, church or mosque.

We’re all going through the moves because that’s what we think the deal is. We all undergo rituals of offering flowers or candles or chaddars and believe that we have done our part. And if we don’t do all these things, we feel guilty about it. We even feel guilty about it because of the people around us, whether they are older or younger.

This is the classic case of ritual practice. Unless the philosophy behind the rituals is known, this breeds superstition. Holy book interpreters will warn us of dire consequences here and hereafter if we somehow fail to “DO” some things.

Similarly, traders also become superstitious. Some of them have ridiculous rituals that they think are necessary to win. Some of them go to great lengths to avoid doing something so as not to lose. A typical translation of this in trading actions is taking profits early or avoiding taking losses.

Understanding the method means understanding price action. How many people actually spend time on a training program to understand the basic price action? What is a trend? Why is there a congestion? Why should prices fall? Why does a trendline work? What is the relevance of Fibonacci retracement and why does it work? Is there any reason why the Bollinger should decline and decline and if so, do I know?

Unfortunately! I find too many of today’s tech stock folks more interested in the bottom line, or the last line, than concentrating on polishing their base. They all want to be promoted without getting their school or college degree. They think that learning in school with a casual glance at a PhD book or the précis on the net is enough to keep their education current.

They feel they can ignore many of the basics of price action analysis in favor of a few, explainable, computerized methods and expect to get great results. They will, from time to time. But long-term success? No chance.

Price action is the foundation of all success in markets. It doesn’t matter whether your approach is technical or fundamental. If you don’t invest your time in understanding market price behavior and keep investing it every day, the market will beat you every day, every year.

Return to your base at every opportunity and relearn them many times over. Then the chances of not being beaten by the market would increase exponentially.

This post Investment Tips: Ridiculous Rituals Can’t Help You Win in the Market, But the Basics Will

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