How I Got Good at Forecasting Price: Technical Analysis
Okay, so I explained above how having an actual strategy for every position you enter is a major key to remaining "disciplined" as an investor.
However, all that notwithstanding, discipline really doesn't mean shit if you aren't able to forecast the markets accurately.
Forecasting Should be the Easy Part
Yes, you read that correctly. Forecasting is supposed to be the easy part. This sounds crazy because this is the aspect of trading that everybody glorifies the most.
Who was "right" vs. "wrong". Who "called" what when and where and at which price.
Accurate Forecasting Comes From Knowing How to Accurately Read Indicators and Measurements
I've said this numerous times before - but 'technical analysis' is not fortune telling.
Consider it to be more akin to weather forecasting. Does your weather man use a crystal ball to tell us whether we should expect rain/snow/sun for this upcoming weekend? No.
They use doppler radars.
Weather Forecasting = Trade Forecasting (Technical Analysis)
According to weather.gov, "Weather forecasts are made by collecting data about the current state of the atmosphere and using an understanding of atmospheric processes to predict how the atmosphere will evolve. The chaotic nature of the atmosphere along with the incomplete understanding of atmospheric processes is what makes forecasting difficult."
Technical analysis works in the same way as a doppler does for weather forecasting. It gathers information about the markets, more specifically price action for a particular asset being examined.
Various indicators then yield measurements or readings based on the data being fed to it (i.e., RSI(14), MACD, EMA indicators, etc.)
Going back to the weather example, "Ground radar, weather balloons, aircraft, satellites, ocean buoys and more can provide three-dimensional observations that a model can use. This allows meteorologists to simulate what the atmosphere is currently doing and predict what will happen in the next few days or, for some models, hours."
^^ This is why I use a suite of indicators in every price analysis to help me forecast future price action for an asset. These indicators help me to develop a more holistic view & understanding of what's going on for a given asset.
Okay, so I explained above how having an actual strategy for every position you enter is a major key to remaining "disciplined" as an investor.
However, all that notwithstanding, discipline really doesn't mean shit if you aren't able to forecast the markets accurately.
Forecasting Should be the Easy Part
Yes, you read that correctly. Forecasting is supposed to be the easy part. This sounds crazy because this is the aspect of trading that everybody glorifies the most.
Who was "right" vs. "wrong". Who "called" what when and where and at which price.
Accurate Forecasting Comes From Knowing How to Accurately Read Indicators and Measurements
I've said this numerous times before - but 'technical analysis' is not fortune telling.
Consider it to be more akin to weather forecasting. Does your weather man use a crystal ball to tell us whether we should expect rain/snow/sun for this upcoming weekend? No.
They use doppler radars.
Weather Forecasting = Trade Forecasting (Technical Analysis)
According to weather.gov, "Weather forecasts are made by collecting data about the current state of the atmosphere and using an understanding of atmospheric processes to predict how the atmosphere will evolve. The chaotic nature of the atmosphere along with the incomplete understanding of atmospheric processes is what makes forecasting difficult."
Technical analysis works in the same way as a doppler does for weather forecasting. It gathers information about the markets, more specifically price action for a particular asset being examined.
Various indicators then yield measurements or readings based on the data being fed to it (i.e., RSI(14), MACD, EMA indicators, etc.)
Going back to the weather example, "Ground radar, weather balloons, aircraft, satellites, ocean buoys and more can provide three-dimensional observations that a model can use. This allows meteorologists to simulate what the atmosphere is currently doing and predict what will happen in the next few days or, for some models, hours."
^^ This is why I use a suite of indicators in every price analysis to help me forecast future price action for an asset. These indicators help me to develop a more holistic view & understanding of what's going on for a given asset.