CHAPTER
5
Increasing Your Chances with Multiple Time Frames
T
he next few chapters aren’t meant to be a full-depth, end-all discussion of technical analysis. They just discuss the indicators and patterns that I have found to work best for me in finding high probability trades. There are countless numbers of different indicators and patterns one could use, and since each person has a different trading style, it is best to get a full understanding of technical analysis before deciding what works best for you. Since I concentrate on only a few select areas of technical analysis, I’d recommend getting a good book on the subject and devouring it if you want to know more. Though fundamental analysis can help one get a good idea of the direction in which the market should be going, it is hard to get an edge over other traders unless one has prior knowledge that something is happening. However, having proficiency in technical analysis can be a great asset to a trader and could supply the edge one needs. A technical analyst believes that a chart already discounts any effect news has on the market, and many traders ignore the news because of this. They know that if anything is important, it will be spelled out in the charts. They don’t need the news to tell them that a stock should be going higher; they can see it for themselves. Whatever the news is, knowing how to read a chart will give a trader a clearer picture of what the market is doing. Even those who are sticklers for fundamental analysis can benefit by looking at charts not only to confirm the news but also to time their trades. 78
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