I often hear: “How can you even trade based on some patterns on the chart?” Especially often from representatives of the Smart Money concept)

A beginner can really see the logic in these words.

Let's figure out what TA is and what kind of drawings these are.

At first glance, these are colorful lines, arrows, “heads”, “shoulders”. But once you dive deeper, you will realize that this is the real art of understanding the market.

Every line, every pattern is a reflection of mass psychology. They show how thousands, even millions of investors react to news, trends, rumors and price action.

Fear of loss, greed, determination and doubt are all emotions of market participants and they all leave their mark on the chart. It is the ability to “read” these emotions and build a plan for further movement that makes a trader successful.

The simplest example is “Double Bottom”. This is a pattern that looks like the letter "W" on a chart.

If we look at it from a psychological point of view: Imagine that the price is falling and then it stops a long fall, market participants think that the price has reached a minimum. When the price rebounds and falls back to the same level, many perceive this as a possible move to renew the bottom and go short, hoping for a continuation of the correction. Traders’ expectation of a fall becomes stronger, and they begin to go short, thereby acting as fuel for further price growth, which is why a “W” is formed on the chart. Having mastered technical analysis and understanding the psychology of the market, you can trade such a movement.

This is a very simple example. The main thing is that it is clear to beginners)

Thus, with the help of technical analysis, many traders predict price movements and make decisions to buy or sell. This is not fortune-telling, this is an analysis based on past data and the psychology of behavior of market participants.

Therefore, it is important to understand that behind the lines and figures there is a deep system of understanding the market. These are not just drawings, these are stories of success and failure, ambition and experience)

#academia#training#trading #analytics