Most traders, professionals and non-professionals, do not have a department with technical analysts who process information and prepare the report for the trader to operates in markets. Just the same person is the technical analyst and trader, this usually leads to errors in interpreting charts and especially for traders who operate following price action these faults surely lead us to a bad execution of operations. Regardless of price action.
The first thing to do is get the suit of Technical Analyst market and get quality information that will allow the trader to make better decisions, identify profitable opportunities, try to act on the right side of the market, and avoid false signals.
Our first job is to define in our charts support levels and resistance that the price is marking us, I personally divided into two groups, long-range and short-range in annual daily bar charts as the example. The task is "simple" but not easy. (takes practice). In the short range of only left the last quarter.
When in doubt or simply believe that a certain price is a support or resistance level mark on the chart and then the time and price show you if that level was really important for the market. The correctly identify these levels will provide more than 60% of the work.
As seen in the chart do not use Lagging indicators that are behind the price action. Respect for traders who can interpret other indicators and even many lagging indicators which combine with other techniques ... but not me.
We also have projection indicators such as support and resistance, pivots, trendlines and Fibo's. Many of these tools use daily.
The single biggest indicator we use is the price.
An analyst price action is a technical analyst, uses price as its main indicator, studies the structure of charts and price action, this makes only believe what you see and not what you imagine or would like happened. The technical analyst no seeks entries, no trade, just looking for quality information and filtered noise excluding graphs.
This way of ordering the head and work has some advantages: it reduces the perception of randomness, minimizes the contradiction between indicators, regardless of the trading platform, and enable immediate adaptation to changing market conditions, which happens frequently .
Summarizing the technical analyst will configure in our brain, or "our new employee" will prioritize and deliver tasks before informing the trader:
- identify trends
- identify levels
- Identify patterns (Breakout - pullbacks)
- Quality information
Remember you only need look information when making this analysis, no seek operations.
In the next post will develop many technical concepts and words I have used.
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