Price Action Can Be Deceptive – Look To The Charts

Charts Display More Than Price

Merely observing the price action “in the moment” is extremely deceptive. The previous candles on a low time frame chart mean nothing when measured against the long-term trend. Charts reveal so much more than price. Traders and investors who only consult the “price metric” will most times come away with a very incomplete analysis. You need to gain as much information as you can if you want to succeed. As mentioned multiple times before, confluence imparts the most probable outcome. When price action is confirmed by multiple alternative metrics the case becomes stronger. Seeking out multiple areas of confluence is the safest way to trade.

The Leading Cause Of FOMO

Those who choose to give in to FOMO usually have one thing in common. They are merely consulting price and allow it to overwhelm their decision-making process. Presenting a trade idea to the “power of the charts” will soon put things into perspective. However, many either choose to ignore the charts or are unable to correctly interpret them. As a result, great volumes of buyers enter the market based on nothing more than short-term appreciation. This is very dangerous. Any peak in any market will always reveal the greatest rate of price appreciation relative to time. Investment decisions based solely on price are to a large extent responsible for these monumental moments in the market.

The Benefits

Charting is highly beneficial for a number of reasons. However, the most important is the removal of emotional and erratic responses. Abiding by the direction of the charts will by default bring an abrupt end to emotional responses. You cannot simultaneously do both. You either choose the path that the charts suggest or the path of your emotions. Once again, discipline comes through as an imperative aspect of trading. Show me a great trader and I will show you someone who has mastered the art of controlling their emotions.

Price Beyond Price

When analyzing price one should be looking beyond the price into what the price is displaying over time. Price will ultimately reveal formations and patterns that can be utilized to provide further confluence. In other words, the plotting of price action over time will reveal a story. It is this story that you have to discover and read in order to gain the insight required to execute successful trades. Trading, when executed correctly, is very much unlike gambling. That being said, in some instances, it is difficult to discern the difference between the gambler and the trader. Do your best to discover and unlock the hidden story, the reward is worth the effort!

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