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Mistaken View of Technical Analysis

Positive feedback from Ray N., of the United Kingdom (a loyal reader of TurtleTrader), but…mistaken view of technical analysis:

Gentlemen,
Many thanks for a most interesting website. I’ve been a regular visitor during the last few weeks and have signed up to your newsletter so I can keep up to date with developments. I would say that the recent changes have made the content much easier to navigate. However, having said that, I probably still have a fair amount to get through, such is its depth. My experience of trading has been exclusively in shares of LSE listed companies. I happened upon the tech bubble in 1999 just before total madness took it to the peak of March 2000. After initially holding a losing portfolio, its value more than quadrupled and I managed to sell half at the top. I sold the remainder 6 months later as the falls continued and ultimately ended up with about twice my initial investment. Why didn’t I sell it all? You know why. Buy and hope. I was hooked on the market but could see no sense in trying to re-enter while the falls continued and trading the long side was the only option for a private investor. Since then, I have discovered CFDs and have experimented with short selling. A joy, and when I was trading as a sideline, modestly profitable. However, during the last two weeks I’ve been giving it my full-time attention with the result that I’m losing consistently. The reasons for my losses are obvious, based on what I’ve learned at your site. I do not understand money management. I’ve also noticed that trades held over several days or weeks can be winners, but day trading is a lottery. My consolation is that, overall, my amateurish efforts have still outperformed my pension fund managers! I’m now resolved to return to first principles and learn how to trade properly, over the longer term. I’m 51 and my income from IT contracting is less certain with each year that passes. So, my objectives are to trade profitably so as to remove the uncertainty of freelance employment and to provide security in retirement, something best not left to HMG and my pension fund ‘managers’. One question I have concerns any prerequisite understanding of technical analysis. I gather that the objective of trend following is to identify trends in their early stages and then to apply risk/money management techniques to achieve maximum profitability as the trend runs its course. Once again, thanks for the hype-free website, which I’m returning to as soon as this email is sent!

TurtleTrader comment: There is no technical analysis that is a prerequisite to trend following. There is no additional technical analysis you need in advance or during trading as a trend follower. Trend following fully includes entry criteria. More.

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