Do Technical Analysis and Charting Work? Can Technical Analysis and Charting make me money? Is there any Secret Formula for Success in Trading? These are the questions which are always on every trader’s mind.
There are many documented success stories of individuals who win big year after year, using technical trading methods exclusively.There’s Ed Seykota, who multiplied his clients’ accounts by 2500 times(250,000%) in about ten years and Michael Marcus, who parlayed a $30,000 initial stake into $80 million.
Another famous trader, Larry Williams, who won a national trading competition in 1987 by multiplying $10,000 into over $1,000,000 in one year. He subsequently wrote a book titled, How I Turned $10,000 Into $1 Million in One Year.
Is there any Secret Formula to make such money? Did these gentlemen discover the secret to riches? Not according to them. Each of these traders said they use technical methods, almost exclusively. If you read their interviews, you will find that each trader said basically the same thing – “develop a trading system that matches your trading style,and maintain discipline in sticking to your system”.
According to them, the Formula for Success in Trading is:
1. Find a trading style that matches your personality.
2. Develop a system according to the trading style.
3. Stick to the system (discipline).
Every successful trader develops a trading style that matches his or her personality. You, too, have a natural inclination towards your own, personal style. And whatever your style, it is important that your trading match it.
- You may be very short-term oriented, wanting to capitalize on quick, five-to-ten-day moves to make many small profits over a long period of time.
- If you are less active or more sensitive to commission costs, you may want to trade every six weeks or so, and to set wide stops so that your trades have breathing room.
- You may want to focus on the general market trend, or may feel more confident trading short-term opportunities against the trend.
Hence, almost any method will work, if it matches your personality and incorporates good money management principles. So, select a method which suits you well , trade accordingly and avoid looking for Trading Tips.