Only for Advanced Traders?
I had an email over the weekend that came in concerning my price distribution trading methodology course. The emailer voiced the concern that the methodology outlined in the course was only for advanced traders. The idea that something is “for advanced traders only” doesn’t quite sit right with me.
First, let me address it in terms of my course.
The price distribution methodology is basically a way of thinking about price movement and a way of displaying that price movement on a chart. That’s really the bottom line. Anyone can learn how to read a chart. It is the starting point of all technical analysis. I’ve yet to see a charting methodology which requires any kind of advanced knowledge or experience to learn. It is merely a question of time and practice. I learned the basic price distribution methodology as a newbie market analysts. From there it was all about working with it.
As for other subjects, methods, strategies, etc….
There are only two areas where I think the “advanced” tag can be applied. One is when a trader is looking at trading something which is derivative – meaning based on some underlying thing. In instrument terms derivatives are things like options and futures, the value of which are derived from the value of some underlying instrument. In this area knowledge of the underlying is important. Looking away from instruments, though, other derivatives are things like technical indicators or trading systems which require some kind of pre-requisite knowledge. For example, a multiple moving average crossover system requires an understanding of moving averages. It’s kind of like having to take Stats I before taking Stats II.
The other way I can see “advanced” coming in to play is in some of the highly complex methods and such where high level math or stats or programming skills are required. For example, a professor friend of mine is working on a neural net forecasting system. No one is going to get very far in that kind of pursuit without having a good working knowledge of neural nets, and in some cases a very strong knowledge of statistics and math.
Advanced = Work?
I think in many cases what people are calling “advanced” is really nothing more than something which requires some effort. To that end it is something they avoid because either they want someone to present them with a perfect trading method all wrapped up on a bow, or they haven’t yet come to the conclusion that all successful traders eventually reach – that long-run success in the markets requires learning and practice, most of which is self-directed.
Keep in mind that an extremely low-work trading method will come at a price. A moving average crossover system, for example, is about as easy as it gets, but it’s a very hard way to trade for most people because of the drawdowns and relatively low win rate.
I’m not saying one need a highly complicated system to be successful, though. Actually, I’m not a huge fan of complex as those types of systems and techniques often lack the robustness to be able to adapt to changing market conditions. To each her/his own, though. My point is that simple techniques which work generally require some effort. Basic charting is a perfect example. It’s not a hard, complicated methodology, but it requires practice and study.
Bottom Line: Work is part of the process. Be prepared for it. Trading is not a get rich quick scheme.
Struggling with support & resistance and knowing what the key market levels are? Check out the Price Distribution Analysis methods I use.
Comments are closed.