Given enough time and motivation, I probably could pull profit from nothing but a naked chart and my buy/sell buttons. Could I do that tomorrow? Probably not, but only because my trading style takes in information found outside of charts, and therefore I would need to come up with a new system that does not lean on outside information. For me to be successful, I need order flow, and often times chart information alone does not provide sufficient amount of order flow for me to trade it effectively.
You mention that a “chart shows me the end result but not the story”. I would say you almost have it backwards. A chart will tell you a story. It will tell you where supply and demand balances shifted, and how price got to be where it is now. It will never, however, show you the end result, because supply and demand are always imbalanced. Even when price is ranging, the number of bears vs. bulls are still off balance, it is just a battle of who will run out of buying/selling power first. But is this thought process as far back as you should go? Let me take you further back, along the lines I was thinking when I was your age (trading age).
Think on a macro scale of what the market is really all about, and how a chart fits in to all of this. Nations have different currencies, and they need to exchange them across a standard rate. Boom, you have a foreign exchange market. As values of nations bounce up and down, the rate of exchange changes to accommodate these fluctuations. These fluctuations are then plotted on a chart, and divided up into timeframes. That is it. A chart is simply a picture of fluctuations that have already happened. It is a tool used to provide a perspective of the market.
Now take a minute and think about that, then consider the following.
Chart reading and interpreting skills are considered essential to successful trading, and this mindset runs rampant throughout the trading community. New traders cannot comprehend price movement without a chart in front of them. To the vast majority of traders, the forex market IS a chart. To them, the markets do not represent currency rates, and the little 6 letter symbol in the corner of the screen means nothing to them. They spend all their time and energy reading charts, learning charts, and forecasting chart movement. They are addicted to them. It is appealing to the mind, as they see all the big moves on the left side of screen, and they just imagine if they were in them. As price dances in front of them, their mind becomes entranced, and they can easily justify why price SHOULD go here or SHOULD go there; all according to these bars in front of them. Then consider that countless brokers catch a trader’s eyes by advertising a computer monitor with a pretty looking chart towering over them. Consider that almost every new trader believes that success begins and ends on this picture in front of them, then consider that 95% of these people fail. Next, ask yourself why you think studying the same tool which countless others have failed with is the best and most efficient route to success.
Charts are used by newbies as a sole tool to predict price. Professionals know this, so they use charts to determine what all the newbies are thinking. Therefore, charts often times provide the right amount of information needed to trick a trader into losing his money. Big players need order flow to get into and out of the market. What better way to do it than to buy at a point you know everyone and their dog is going to sell? The market will follow the big money on such a transaction, because all the speculators in the world cannot provide enough buying/selling power to eat up and oppose a bank’s intervention.
So anyway, my long winded point is to question the importance of charts. Can I profit off a naked one with a buy/sell button only? Probably. Should I devote years of my life studying a TOOL of the market instead of the market itself? Probably not. Again, this is the thought trail I walked down to take me where I am today. Hopefully it benefits you as well.
You mention that a “chart shows me the end result but not the story”. I would say you almost have it backwards. A chart will tell you a story. It will tell you where supply and demand balances shifted, and how price got to be where it is now. It will never, however, show you the end result, because supply and demand are always imbalanced. Even when price is ranging, the number of bears vs. bulls are still off balance, it is just a battle of who will run out of buying/selling power first. But is this thought process as far back as you should go? Let me take you further back, along the lines I was thinking when I was your age (trading age).
Think on a macro scale of what the market is really all about, and how a chart fits in to all of this. Nations have different currencies, and they need to exchange them across a standard rate. Boom, you have a foreign exchange market. As values of nations bounce up and down, the rate of exchange changes to accommodate these fluctuations. These fluctuations are then plotted on a chart, and divided up into timeframes. That is it. A chart is simply a picture of fluctuations that have already happened. It is a tool used to provide a perspective of the market.
Now take a minute and think about that, then consider the following.
Chart reading and interpreting skills are considered essential to successful trading, and this mindset runs rampant throughout the trading community. New traders cannot comprehend price movement without a chart in front of them. To the vast majority of traders, the forex market IS a chart. To them, the markets do not represent currency rates, and the little 6 letter symbol in the corner of the screen means nothing to them. They spend all their time and energy reading charts, learning charts, and forecasting chart movement. They are addicted to them. It is appealing to the mind, as they see all the big moves on the left side of screen, and they just imagine if they were in them. As price dances in front of them, their mind becomes entranced, and they can easily justify why price SHOULD go here or SHOULD go there; all according to these bars in front of them. Then consider that countless brokers catch a trader’s eyes by advertising a computer monitor with a pretty looking chart towering over them. Consider that almost every new trader believes that success begins and ends on this picture in front of them, then consider that 95% of these people fail. Next, ask yourself why you think studying the same tool which countless others have failed with is the best and most efficient route to success.
Charts are used by newbies as a sole tool to predict price. Professionals know this, so they use charts to determine what all the newbies are thinking. Therefore, charts often times provide the right amount of information needed to trick a trader into losing his money. Big players need order flow to get into and out of the market. What better way to do it than to buy at a point you know everyone and their dog is going to sell? The market will follow the big money on such a transaction, because all the speculators in the world cannot provide enough buying/selling power to eat up and oppose a bank’s intervention.
So anyway, my long winded point is to question the importance of charts. Can I profit off a naked one with a buy/sell button only? Probably. Should I devote years of my life studying a TOOL of the market instead of the market itself? Probably not. Again, this is the thought trail I walked down to take me where I am today. Hopefully it benefits you as well.
http://www.forexfactory.com/showpost.php?p=2385299&postcount=73
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