A Short Course in Technical Trading
Trading is all about making money. Technical trading uses chart patterns, indicators, some simple math, and clear rules to make money. There are many successful traders who use instinct, but I believe they’ve got a computer going inside their heads, looking for patterns and signals that tell them prices are going to surge ahead or stop and reverse. Experience teaches you what works and what doesn’t work. In this course we’re going to take some simple ideas and turn them into successful trading. If you can’t turn an idea into profitable returns, then you’re wasting your time. Trading is really all about making money. I was fortunate to have stumbled into this industry in 1970. As far as I know, no one studies to be a trader—it just happens. You watch stock or gold prices going up or down because of a series of front-page news events, and somehow you decide that here is a profit opportunity. You open a brokerage account and make a trade. Win or lose, you can’t stop. It can be the fastest way to making or losing a fortune. When you start out, you have the overwhelming feeling of participating in the ideal of Free Trade. You are making the price and you are trying to beat the market—the collective action of all the other buyers and sellers. It’s exhilarating. When I was asked to teach a graduate course in technical analysis at Baruch College in the spring of 2002, my first thought was, “Technical analysis just isn’t enough.” The students need to come away with a skill that they can use and build on in the future. We were still immersed in the Enron collapse, and the press was exposing the conflicts of interest between the market analysts and the investment banking departments inside the major brokerage houses. All of a sudden, we couldn’t trust the information that was basic to making a buy or sell decision.