When I first started trading, that was some time ago when the very first version of MetaTrader 4 was released. At that time, I used both manual trading and expert adviser, as I was a curious beast. After some months of learning popular technical indicators and charting techniques at that time, I tested my knowledge in real world market for the first time in Forex trading. I was light minded and all I thought was that I would just use the most basic techniques I learnt.
Just as if many starters do, I also had some beginner’s luck. In the 20 trades in one day, I got around 17 trades produced the correct buy and sell decision. As the great fan of statistics, math, and polymath, I know that the figure 17 out of 20 is not a random number.
Ironically, I was not able to produce similar results following days. From next days, I was probably disturbed with several minds like those that I will become rich soon if I maintain this high success rate, etc. I could not concentrate on my trading. When I look back all this, this was the typical beginner’s thought anyway. Even though this was happened over 10 years ago, still I considered this as one of very important lessons in my life.
I am very much analytical person. I gave a lot of thought on the incidence where I got 17 correct predictions out of 20. Therefore, I started to think about the main ingredients of this event. It was the chart as my decision was merely the reaction against the price action in my chart. That is to say that my intuition does most of work to figure out the decision. It was not technical indicators (I guess they supported my decision up to some degree but not the main ingredients) though but it was rather entire candlesticks drawn in charts.
After intensive research, I found the closest and most convincing term to describe what my intuition did. It was the price patterns. Subconsciously, my brain was looking for certain geometry from chart to win in the market. Of course, not many people can manipulate subconscious in consistent manner including myself. To use the subconscious effectively, you have to bring the subconscious to the surface, i.e. conscious space. That is to say, that you need some training or tools to pick up the geometry like your brain does subconsciously.
You know that pattern recognition is the most accurate weapons we have and we use every day in our life. We use it to find out our friends, lover, enemy, good house, bad house, etc. For forex and stock trading, this is also the precious weapon to select good stocks and bad stocks to trade and to figure out potential bullish and bearish market as well as turning point. Price patterns in charts are aligned with your intuition for your trading. Fortunately, we have made many trials and errors of using this price patterns in the market to find out the best practical application. Here is one secret of best trading practice.
The very essence of best trading practice come down to one words, “superimposed pattern”. That is to say, that you make trading decision based on multiple of patterns aligned in chart to get the highest accuracy as possible (=superimposed pattern trading). This follows the typical wisdom taught in many trading schools and textbooks, “trade with multiple evidences”.
Geometry and patterns are not rocket science. Anyone can understand and use them for your trading. Some example of superimposed pattern trading principle and some recipes are introduced in my book.