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How to Stop “Sucking” at Analysis

The question really is “Do you suck at Analysis? or Do you suck at Predictions?”
Because a lot of traders confuse the two. And there is a very big difference between Analysis and Predicting. And when you start to understand this, not only will your trading improve but you’re also going to be a lot nicer to yourself. Let’s face it telling yourself and or anyone else that you suck at anything is pretty mean, and will eventually if it hasn’t already, erode your confidence.

Providing a self-fulfilling circle of not being able to do the thing you said you suck at, because you said you can’t. Clear as mud I know, if you haven’t read my blog on the subconscious mind perhaps now is the time. Quick recap, your subconscious wants to make you right all the time. So if you say you can’t or you suck at a particular thing your wonderful subconscious mind will help to prove you right. Which reinforces your belief of sucking at whatever it is you suck at, and so on and so on.

 

Number One

So stop saying “I can’t” or “I suck” at anything, it’s not helping you. If you still insist on being extremely mean to your wonderful self. And you really want to tell the world you suck at something, make it drinking through straws. Because at least then it’s true.  99 Times out of a hundred when someone tells me they suck at analysis, it’s not true, their analysis is fine. They just can’t predict for toffee. The good news is that has no bearing on your ability to be a great or good trader.

The job of great traders is to analysis the charts in such a way as to see high probability trades. Obviously while following their rules which have been carefully tested both forwards and backwards. And then written clearly and concisely in their Trading Plan.

Traders are not “mystic megs” or fortune tellers, they can not see into the future. Yes that may be hard to believe when you see a successful traders bank account. Predictions are for those types you see on telly, you know the guys you have never really heard of with the big perfect white shiny teeth, pressed suit and a two barreled name and their resume sounds really cool and professional.

But do you notice how they are never really around for long. Mystics are only as good as their last prediction.

 

Number Two

Trading is theoretically a two horse race. The chart is either going up or down. You can either buy or sell. So when predicting you have a 50/50 chance of being right. When anyone is predicting they have a 50/50 chance of being right. So don’t be fooled by these guru’s who tell you to go back in time and see they were predicting this would happen. How many other predictions have they made that haven’t come true.

I was going to say that “I suck” at predicting, but I’ve just told you not to do that because it is bad for morale. So let me re-phrase it to this. If any of my trading buddies hear me make a prediction in regards to trading, they place the trade that instant…in the opposite direction. I am that good at getting it wrong. When I actually sat down and tested my predicting accuracy, I was 90% incorrect. It’s just a shame it doesn’t work when I try to trade against myself, my numbers go down and all of a sudden it’s like I can see into a crystal ball.

Weird but true. So it’s an edge I can’t capitalize on. Which is just as well because it does appear to be a short lived edge. Those guru’s are never around for long…

 

Number Three

So what is the difference?

If you can draw a trend line, support and resistance and define a trend. Then you can analysis a chart. Your analysis would be if the market does this I’m going to do that, but if the market does that I’m going to do this. Doesn’t matter if the trade wins or loses that’s not what analysis is about. Analysis is finding a high probability trade with a good reward if it does go your way. Let’s look at a chart.

AUDJPY Chart Analysis

As you can see from this chart screenshot that I have taken as I am writing this blog, I have done my analysis. I have four support/resistance lines and a trend line. The trend line was formed when I got the second confirmed low (the second thumbs up). The first green arrow represents my first trade. I saw that the market had returned to the trend line but not broken it. So I added my counter trendline and took the trade on the break. I took profit at the third resistance line just before the market started going flat. Now the market has again reached the trendline and not broken it. So I add my counter trendline and enter on the break as you can see.

Do I know if this trade will reach the take profit? of course not. Does that invalidate my analysis? In fact if it breaks the uptrend line and gives me a sell signal, I will close out this buy and take the sell. My analysis being if the market bounces off the trend line I will take the buy if I get my signal. Or, if the market breaks below the uptrend and gives me a sell signal, I will sell it. Now if I was to sit here and tell you that the market is going to 85.00, that would be a prediction. If it didn’t hit 85.00 that would make me a useless predictor.

But if this trades loses, well it’s just one of my systems losses. No system is 100% right. Doesn’t mean my analysis is wrong. Because I know if I keep taking those trades, over the course of the year I will win more than I lose. And I know this because I’ve tested it, and I track it. I keep a trading journal, I make a note of every trade. What this does is build confidence in not only you but your system, your strategy. This then allows you to see that you may have 5,6 or even 7 losing trades in a row, but you still made money.

 

Conclusion for Analysis

 

If you have a strategy that you have tested and you look at the charts and analysis them as per your rules. And you end up with a plan, e.g. “If the market bounces off the trend line breaks the counter trend line I will place the trade, if not I will stay out of that trade.” Then you have perfect analysis regardless of the result.

It is more likely that you suck at predicting what the market is going to do next. Welcome into the fold you are now a majority trader. 80% of disciplined profitable traders “suck” at predicting, that’s why they don’t do it. You will have just as much luck predicting the toss of the coin.

So, stop trying to predict the markets next move. Just follow it when it does move.

 

Let Us Help You

If you are struggling with this concept or would just like to see it in action. From weekly analysis through to taking the trades through the week as they give us a signal. So that you can see for yourself that we don’t predict, we analysis and follow the market. And more importantly we make money doing it.

So, if you would like join us for Sunday Analysis, and again for two sessions daily (looking for and placing trades that you can copy should you wish) then come join our Trading Room for a special discount of $10. Yes you have read that correctly $10. $10 Dollars will get you into the Sunday Analysis session as Andres looks through the fundamentals and the currencies strength, to find the strong and the week.

$10 then allows you to sit in and observe as Andres carries out his routine in front of you twice a day for five days. March madness has seen this room average 250 pips per week. I don’t know how long we will run this $10 room for and we can only take so many in the room so register today here, for your chance to see how the pro does it.

If for some strange reason you are still unsure that $10 is a great investment for a week of looking over the shoulder of a highly successful trader, feel free to drop in to our free Sunday Analysis Session 6pm EST here.

 

To Your Consistently Profitable Trading

Callum

 

P.S. What did you think of this Lesson? Please share it with us in the comments below!


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Callum McLean

Co-Founder and Trading Psychologist at Special FX Academy
Trading Psychology Coach and Certified NLP Coach. It is my belief that trading is 99% Psychological. And it is by understanding and improving your psychology, that you can be a successful trader. Success is a formula that everyone can and should learn.

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