Users must first understand the strengths and weaknesses of the indicators they are using. Many are not even aware of the pricing field used to compute the indicators. The pricing field used is a basic fundamental part that must also be factored into the analysis, together with the indicator reading.

Many users are unknowingly using ‘similar’ indicators (albeit different formula) as they are unaware of pricing field utilized. 

In order to know which indicators to use, you need to understand the strengths and weaknesses of the indicators. Then, you will know how to use its strengths for your analysis.

I will be covering this exhaustively at the upcoming TrackRecord Technical Analysis Course.

Prices are actually driven by how market participants interpret market news, price swings or the technical picture. There are different types of market participants; from Intraday to Immediate-term, Short-term, Medium-term or even Long-term. Each of these market participants will react differently to market events. What may seem to be a bullish event for most, may present as a good opportunity for the big institutional Long-term players to liquidate their huge positions by selling into the bullish scenario.

The emotional state of market players is factored into the price which are driven by how they react to various market events. These activities are captured in a price chart and at times, a sharp chartist might be able to spot a “Historical Identical Movement (HIM)” that are similar to the current market action. Hence the saying “History Repeats Itself”. I will be showing such examples during the Technical Analysis Course and these will also be featured in our upcoming reports – “A Perspective from HIM”.

Self Fulfilling prophecy, Neutralization of Successful Technique and Subjectivity are three of the  most common criticisms of Technical Analysis.

Obviously I do not believe in any of the above, else I would have given up Technical Analysis long ago.

Trading or Investing can be emotionally demanding especially when holding on to a losing position. There is danger of developing a pre-trade mental mindset – i.e. forming a preconceived opinion on the market before conducting any form of analysis. This will likely lead to a pareidolia experience which is the tendency of identifying patterns that suits one’s pre-trade mindset – patterns that do not exist. Beside chart patterns, these sufferers also have a tendency to look for different indicators or tweak the indicators parameters to suit their pre-trade mental mindset.

Luckily I was able to discover this by early 1990 (10 years into trading) and look for a solution to resolve these weaknesses. My solution is the need to have a technical trading plan. I will be sharing my guide to the development of a personalised technical trading plan during the upcoming Technical Analysis Course.

In a sense, I was ‘lucky’ as when I first started in the market in late 1979, charts and indicators were all drawn and computed manually, as personal computers were ‘non-existent’. As a result of this, I gained an understanding to the inner working of many indicators, which ignited my curiosity and led me to explore the motivation behind the indicators.

My various roles throughout the years in interbank deal, prop-trading, floor execution, managing an Equity research team and speaking to the High Net Worth clients (from Asia-Pac to Middle East), allowed me to experience the thought process of various players and their reaction to market activities. Having handled their orders, I was able to see first-hand how their actions are reflected in the price charts. This provided me with the skillsets to deliver TA Workshops with different views, which benefited majority of the Bloomberg users I trained from May 2000 to May 2018.

Prior to 1996, I turned down numerous offers to conduct TA workshops because I was afraid that after the workshops, these participants would be smarter than me and I would lose my market edge. As I was dually employed by Wardley (HSBC owned) and HSBC Securitas Indonesia (equity), and needed to foster better relationship with the HNW clients, I started conducting TA workshops. As a result, I discovered that I actually benefited more from these workshops than the attendees. Thus, I started to structure and conduct proper TA workshops for Bloomberg, when I joined them in May 2000.

My 20 years of trading experience (late 1979 to May 2000) helped me to relate between trader reaction versus price actions. It also helped me understand how indicators can unveil hidden price information that are not easily identifiable from the visual analysis of the price chart alone. My interaction with High Net Worth clients also provided me with a different insight on how they react to various price situations. I learnt the importance of adopting risk and trade management and how charts play a role in this area.

My 18 years in Bloomberg (May 2000 to May 2018), provided me with opportunities to interact with a totally different set of market players from various market sectors and regions. I learnt how these players used charts, which gave me the ability to efficiently impart my expertise, catering to different player types and knowledge levels.

The recommendations on my LinkedIn https://www.linkedin.com/in/greggtan/ is a testament to my work done which has helped the other institutional players.

The reality about identifying “false breakout” is that it can only be classified as a “false breakout” after it has happened.

There are various approaches to identify potential likelihood of a “false breakout”.

These include:
• Price and Volume analysis – volume should be greater on breakout bar etc.
• Price behaviours before and on breakout bar – deeper understanding of the psychology behind price bars provide such ‘insight’ – I will be sharing more about this during the upcoming TrackRecord Technical Analysis Course.

Although armed with these insights do not guarantee the total avoidance of suffering from “false breakout”, it will minimise these risks.
It is of utmost importance to have an actual stop place in for any open trade – not just a mental stop.

The reality is that, what is seemingly a retracement could become a reversal of an underlying trend. Therefore, it is important not to rely solely on Fibonacci retracements.

When used in combination with various tools (including price bars behaviour), user can be forewarned that if a price were to retrace beyond a certain level, it will likely cause a change to its underlying trend.

I tend to feature this in our TA reports – “A Technician’s Perspective.

Technical indicators can be broadly categorised into Trending and Non-Trending. However, there are also predictive charting technique / methodology (e.g. Elliott Waves, Gann etc…) that provide entry and exit levels.

Trending indicators (e.g. Moving Averages, MACD etc…) tend to lag behind market movement as it attempts to smooth out market noises and identify the underlying trend direction. This inevitably result in late entry and exit signals. Trending indicators will not perform well during sideways or a trendless situation.

Non-Trending indicators (e.g. RSI, Stochastics etc…) are ‘anticipatory indicators’ – it indicates if the current market situation is over-hyped. It anticipates (or predicts potential reversal or slow-down) of an underlying move. Whilst this work well in a sideways or trendless situation, its readings can remain in over-hyped (overbought or oversold) conditions for a prolonged period during a strong trending situation. User relying on signals from these indicators will often miss out on trading opportunities.

A technical trading plan is needed to be more successful (or comfortable) in applying technical analysis as the main (or part of) trading / investment plan. Many users (retail and professional) I encountered tend to rely on either one single indicator – or at best two indicators. Adding to the ‘sins’, they tend to:
• Look for different indicators to suit their pre-trade mental mindset
• Tweak the indicators parameters to suit their pre-trade mental mindset
• Use ‘similar’ indicators albeit different formula.
The abilities of incorporation trending, non-trending indicator and chart patterns etc. into a trading rule will provide higher level of confidence. However, it is advisable to use only their trusted indicators – not just hearsay of a specific indicator on its individual performance.

I will be sharing my personal guiding rules in developing your personalised technical trading plan during the upcoming TrackRecord Technical Analysis Course.

No matter how good a technician or fundamentalist you are, it is difficult to be successful without also adopting proper money and trade management.

Supply & Demand zones are actually a more ‘fancy’ word for Support and Resistance levels. These are the basic principles of technical or chart analysis. These topics will be covered as part of the upcoming TrackRecord Technical Analysis Course.

Fibonacci retracement is widely used. The ‘hidden questions are:
• Which of these levels will more likely provide Support or Resistances?
• Which start and end points to use?
Fibonacci is very relevant and I often use it for market analysis. This is evident from the report “A Technician’s Perspective” Elliott Waves – one of my favourite subjects introduced to me in early 1980s and one that I spent a lot of my personal time and financial resources on. Nowadays, I often laugh quietly when I find many users (exactly like me in the past) overly fixated by the need to know which degree is the current wave riding on. To ‘overcome’ this, I will offer a subtle ‘clue’ on my personal approach to trading with EW… are you more interested in labeling the exact wave counts or more interested in trading? (I do use EW as part of my analysis). 

Fibonacci extension – EW practitioners will definitely use Fibonacci extension as it is part of EW to project the target of the motive waves. Fibonacci retracements are used to identify the potential end of the corrective waves. A very important aspect on using Elliott Waves or any technical indicators / techniques is the adoption of a more objective trading rule. This helps to keep unwanted emotions under control during the analysis.

During the Technical Analysis Course, I will be sharing my personal guidelines to customise a technical trading plan that will suit your personality.

Nowadays, AI Robot, algo trading are the ‘buzzwords’ in the market. Do understand that all these need initial input by experienced market players or technicians. There are some human thought processes behind these algo. Indeed, with Deep Learning, the machines are able to learn and improve their trading successes.

However, be wary of many claims of having access to such technology – most I encountered are just using simple computerised rule-based trading methodology – no AI or Deep Learning.

A basic clue to avoid falling victim to such claim is to know their hardware specification and internet connectivity. Even the monitor refresh rates and response time plays an important role in the trading space.

So how can manual traders continue to trade and profit?
• Change your trading / analysis style. Forget scalping or high frequency trade – you can’t beat the computer speed. You are more likely to fall prey to emotionally-driven trading decisions
• Speed up analysis and decision making process with technical trading rule-sets – which also keep emotions under control
• Upgrade your internet connectivity, hardware specification and more importantly your monitor refresh rates and response time.