As far as learning technical analysis goes, many investors will make short-term trades based on longer-term, “solid” patterns such as the head and shoulders top covered previously in this series. The problem with relying on solid patterns is that they are generally longer-term in nature and may not produce the short-term returns one hopes for.
One of short-term patterns that investors seek is a two-bar pattern known as the inside bar. This pattern reflects a short-term change in investor sentiment, so that if a pattern has been driven downward, the possibility is that the short-term prices will turn around and head the other way.
Discovering an Inside Bar Pattern
Investors who are just learning technical analysis might have a tough time identifying the inside bar. Explained (our website has a diagram), the inside bar pattern consists of a taller bar (wide trading range) followed by a shorter bar (tighter trading range).
One of my friends recently committed herself to a healthier, fitter lifestyle. It started off as a very healthy change for her, but at some stage it turned into an obsession. She now spends hours a day training, documents and reviews everything she eats, yet is not training for anything specific.
Its a little bit sad really, she originally went out to give herself a better life yet now she cannot even enjoy many of its simple joys. Eating popcorn at the movies fills her with guilt. A dinner out with friends will be finished early if she has training tomorrow. She isn’t actually training for anything specific, yet her regime rules her life.
I have another friend who used to be the ultimate family man. Everything he did at work was driven by his desire to improve the lifestyle and standard of living of his wife and children. He just loved going home and sharing the fruits of his labours with them.
One day he got promoted.
I think the biggest problem most new traders have is the fact that they have to sift through all the misinformation that is being sent through the online community. They have to figure out what is it that they should be listening to, and what they should avoid.
Here are just some of the many overblown forex trading myths that you hear about so much from traders.
Believe it or not, it doesn’t matter what charting platform you use. I know many people make a big deal about this, but its completely overblown. The most important thing that you’ll need is a reliable data feed. All the other stuff you can just throw out.
Try to remember this when you are drolling at some thousand dollar charting platform that is supposed to reinvent the wheel. Focus! You don’t need this.
There are no shortcuts in trading. I know there are a ton of people selling shortcuts, but they simply just do not work.
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What to search for in an online broker.
Brokerage House rates – this is the range at which you are charged for buying or selling through your online account. These rates are usually charged based on a sliding scale.