The Summer of Milestones

keep-calm-and-celebrate-post-100

WordPress lets me know in big bold letters what my current post count is whenever I publish a blog. My last blog was #99 and this one is the Big 100! Of course I’ve published 100’s of posts on my Xanga Account, but Xanga never heralded stats to make me aware of the running count.

Since WordPress made me “aware” of my impending 100th post, I starting thinking that maybe I should include some major news or something else significant to mark the event- which explains the time gap between my last post and this one. I was waiting for something worthy to put down for the big 100.

First off, I have to say that I’m not a fan of the new editor format WordPress introduced. I got used to the old one and they moved things around, changed some naming conventions, and didn’t even give a warning or grace period for folks to check out the changes before the switch. As a result, I made my first big error yesterday where I lost an entire blog of edits because I didn’t press the “Update” button. I was looking for a “Save/Save Draft” button, but the new editor version doesn’t have one. Instead they have “Update”, but I missed the connection. What’s worse is that there are no “auto-saves” so you MUST press the “Update” button to save your work. šŸ˜”

eureka

Onward to “Trading Updates”, where these are some pretty significant milestone events to discuss.

My last trading update mentioned that I had finally tailored my trading system to a point where I felt I was rapidly closing in on consistent quality trading. Well, my system was accurate enough to allow me to make a ginormous discovery/realization- finding what I call “immutable action-reaction” chart patterns.

Okay, to bring everyone up to speed- technical analysis (TA) deals with analyzing chart data such as price and volume using mathematical or graphical tools in order to help forecast future price movement. It can be as simple as noting support and resistance levels to complicated math equations and algorithms run on computers generating buy or sell signals.

The biggest problem with technical analysis is that its accuracy is limited – sometimes it works, and other times it doesn’t, which lowers its reliability. This is why in the trading/investing world there are many advertisements for “sure fire” trading systems that all but guarantee success. Of course, common sense asks the question if these systems were so good, why would their owners be selling the plans as opposed to using them to make money?

The majority of traders dream of finding an accurate technical trading signal that would take all the work out of deciding when to be buying or selling. Well, this month I found something pretty close to that.

What I discovered is a market action-reaction that acts the same way with my TA set up. What I mean is if prices act a certain way to my set up, then the following reaction has a certain characteristic that also repeats. So if one sees the action, one now knows what the coming reaction will be. This is as close to a guaranteed forecast signal that I’ve seen.Ā 

I consider myself very fortunate to have made this discovery- I was going through the end of day charts and reworking my analysis to see what the best trades would have been when I made the connection. The movements are so subtle that it’s easy to miss, and I’ve seen the behavior numerous times over the years, but never made the connection until now. The market moves in so many twists and turns, looking for such a connection is like the proverbial needle in a haystack. Without the right TA set up, I would never have noticed it.

This is a huge discovery in many ways. First, it’s a near guaranteed trading signal. Next, it serves as a reference point when making system adjustments. Normally, adjusting a trading system is difficult because you never know if any adjustment you make will break another part of your system. By having a known action/reaction, all adjustments can be made using that result as a constraint. It also works over many time frames so it can easily be used for longer term investing.

The discovery is pretty new so I’m still working on incorporating it into my system. I thought about waiting until I was using it and generating a stream of profits for confirmation, but that might take a few more weeks and didn’t want to keep from blogging about events that long. This is where I write about my journey of day trading proficiency and this is something worth writing about! =)

The next few weeks will tell that tale of whether I know what I’m talking about or if I’m suffering from delusions. šŸ˜‰

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