PATTERN SEARCH SOFTWARE
You decided to use advanced pattern investment strategy? Hmm… good. Let me tell you something really important. Chart pattern trading is based on visual perception.
Did you ever wonder how reliable or objective your perception is? Chances are more than 75% of information never take place in reality.
Why is this so?
The reason for this is the so-called inheritance mechanism. What you previously perceived was recorded and now substitutes the real time data.
Let’s say your previous pattern was a loser. In this case, you will slightly hesitate either to take the next one or not. The emotional pain is still fresh and your mind launches a pain avoidance mechanism that is commonly known as fear.
Let’s have another example and pretend your previous pattern was a winner. In this case, you will rush to jump into the next opportunity. The memory of the pleasure you had pushes you to experience this state once again.
You know that advanced patterns are about 60% accurate. Of course, this does not mean that the current pattern has more chances to win than to lose. You should keep in mind that its outcome is absolutely random. In other words, the chances for a loss are equal to chances for a winner. However, 60% accuracy of investment strategy means that after 100 trades you will have about 60 winners and 40 losers.
If you hesitate, you miss the trades you are supposed to be in. When you notice it, you do not understand how this could happen. Some traders tear their hair because of a missed opportunity. If you rush, you find yourself in the trades you were to stay out. If only you double checked the pattern and noticed that it was not valid!!
I have encountered only two factors but it is enough to ruin your investment strategy.
We will do some calculations right now. On average two trades out of 100 do not trigger/ do not hit the takeprofit/ hit the stoploss because a broker widens the spread. One trade’s profit is fully negotiated because of negative swap and 2 trades profits are fully wiped out because of commissions. Remember that you only have 60 winners in 100 trades. 60-2-1-2=55. These factors do not depend on you.
This would be enough to generate profits if only a trader did not have an inheritance mechanism. An average trader usually makes 3 trading mistakes because of fear and 3 trading mistakes because of euphoria in every 100 trades. 55-3-3=49. These factors do depend on you.
Due to average 1 to 1risk to reward ratio in advanced formations this inevitably results in blowing one’s account off. If you encounter deposit/withdrawal commissions and taxes, you will understand why 90% of traders lose 90% of their money within 90 days.
What is the way out?
You cannot fix the problems that do not depend on you but you can fix those that do depend on you. There are two solutions:
- Solution #1. Spend thousands of hours practicing on historical data, on demo and then on real accounts until you are able to recognize the advanced patterns on autopilot without any emotions being involved. This is a long journey and this method obeys the 10K rule (psychologists say that it takes about 10K hours of practice for a newbie to become a world-class master). What is 10K hours? If you spend practicing 10 hours every day, this means 1000 days or almost three years. But majority of traders are only ready to spend 4 hours on weekends for backtesting practice. In this case, the journey will take 2500 weeks or 48 years. Moreover, on your way to your goal you will inevitably blow off several accounts.
- Solution #2. You invest some money into a professional pattern search software and start getting objective setups today. Instead of spending ages on training your eyes to recognize patterns, you can build up a winning portfolio or develop sound money management strategy.
Ready to make a step further in your trading career and get an edge over the majority market participants? Check out the Pattern Search Software.