Reading the market and interpreting it is an art. Wyckoff, Gann, and others made it a philosophy of life that allowed them to understand the language of price, of which they formed a practice. This is so, the price is a language, it is the electrocardiogram of money, and a trader must learn to read the traces of the professional, the necessary signals to understand the direction of the market.
To start on this path, one must create a certain cultural and historical baggage of the market that allows you to understand the context and the setting where it is. This will allow you to understand how it works, how the market is managed and how it develops and expresses the price in the space-time of the chart.
We must dedicate every day to this activity. It is a practice and this is why I mentioned above that characters like Wyckoff made this their lifestyle. Also for this reason on certain occasions we have talked about the philosophy of trading. Practice makes perfect and this practice must be part of the day to day in order to really understand and see what is on the graph and connect with what is happening there and not what you want there to be.
It is a common mistake as a newbie to believe that the market will respect candlestick patterns, triangles, or breakouts of a kind. Believing in a trading system with blind conviction is only going to lead you to failure for sure, and believe me you are going to learn this painfully.
In front of the screen you go directly to trade with your belief system, because based on what you think you see on the screen you make the trading decisions. To read the market it is not only necessary to know about market, economic and financial theories, and even statistics and mathematics. The most important job is to get to know yourself as an individual, understand yourself and how your brain works in each situation. Some will say that this is psychology and it may be, but the job, as it is in philosophy, lies in knowing ourselves and the world around us. Who am I, where am I, where am I going? Have no doubt that what you see on the screen is a reflection of yourself.
The operator must be able to align his knowledge and his mind, his beliefs, in a neutral point from which he observes the market with attention and calm, so that only when necessary he uses all his preparation as a weapon, like a harpoon to hunt the movement of a swordfish.
In the following video you can take a more in-depth look at an analysis of how to interpret the price and its movements using the theoretical tools mentioned above. (This is video is only available in spanish)
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Alejandro Aristeguieta
CEO in Aristeguieta Capital.
Investment Firm and Financial Analysis.