The opening of a trade is possible only after the analysis of the market situation. There are many methods to accomplish this task. But technical analysis is used by almost all traders. Except, perhaps, those who sell on the news. But there aren’t many traders like that. Today we’re talking about technical analysis. Specifically, what are the main mistakes traders (usually beginners) make in the practical application of technical analysis. At first glance, they may seem insignificant. However, these little things change the course of trading for the worse. Therefore, it is better to pay attention to these popular errors at once to exclude their negative impact on trading at the start.
Level construction
Level trading is a basic method of trading, the effectiveness of which has been proved by more than one generation of traders. But for successful trading it is very important to learn how to define them correctly on the price chart. The main mistake of some beginner traders is to carry out the levels not by candlestick extrema, but by their bodies. You can’t say it’s a very serious flaw. But such a line construction can affect the trading account, because it makes it difficult to correctly identify the entry point and to identify a false break-down.
Ignoring levels
Candle patterns and shapes can tell you a lot about the market situation. However, trade in them requires special attention. If you see, for example, a trend continuation figure on the chart, you need to see if there is a strong level in its path. He can confuse all the trading plans. The trend movement will not continue, and the deal will be closed with a loss. Do not rush to open an order immediately after the formation of a candlestick figure. We should wait for the confirmation of its signal and see how the price will behave near an important level.
Doubtful trade
Technical analysis includes a wide range of tools, including patterns. The most popular of them are easily remembered, and even a novice of the market very soon begins to “read” them on the chart. If the pattern is formed in accordance with the rules, it is striking at a glance at the chart. But sometimes a trader tries to see what he wants to see on the chart, not what he really wants to see. He marks a candlestick model that does not fully meet the conditions of its formation and opens an order. This approach creates risks for the deposit.
The desire to trade on small TFs
Beginner traders are trying to make money by choosing small timeframes for trading as quickly as possible. But it should be understood that tehanalysis works better on large TF (from clockwork and above). This is explained by the fact that the impact of the so-called market noise on such charts is minimized. And this allows you to get more accurate signals.I hope you find my comments on the technical analysis useful.Fyodorov’s Inga02.10.2019