hello guys today we're going to talk about technical analysis
again we already did a video about technical analysis which was
an introductory video explaining to you what technical analysis is
this video however is going to go into lot deeper conceptions it's going
we're going to talk about things that usually take
some years for novice traders to understand
in this video we're going to talk about the exact role of technical analysis
in your trading
and we're going to give you some basic principles to follow when going technical analysis
so that you should use it in a proper way
let me start by saying that cTrader is a no dealing desk STP platform,
here at cTrader we get get compensated from your commissions
that means we actually want you to grow your accounts because the more your
accounts grow the more you trade and the more money we can make
that's the reason that we're making those educational videos
to actually to help you guys and the reason that I'm mentioning this now in the
Technical Analysis video is that some of the things that I'm gonna say are
may be controversial and it's not exactly what you will read in most
technical analysis books and what you will see in most
websites that are trying to sell you something related to Technical Analysis
let me start by telling you first that technical analysis
does not predict the future in a certain way. I am explain to you now why
technical analysis cannot predict the future and why
Forex market is generally unpredictable
the forex market is the largest market in the world it has a daily volume of
about 4 trillion USD being traded
and that much volume is completely uncontrollable
where there is no way for anyone to know what's going to happen
next the half an hour or next five minutes
you also need to consider that there's not only speculators who are
trading
not everybody straining to actually mame money there are also
companies that are trading for commercial reasons people exchanging
money
and the people hedging their risk so they actual go
sometimes on the opposite side
another reason is that in the forex market like any other market
where technical analysis is performed many time frames coexist at the same time
that means that you may do your perfect technical analysis for your
trading frequency in your like five minute time frame or something like that
but at the same time with you there
are other millions of traders who might be trading
others might be trading high-frequency others might be trading on their one or two
minutes charts others will be trading on the 1-hour charts
others will be on the daily charts all these charts provide
different signals at the same time that the
a trade is long at the daily chart
its short on their high frequency tick chart
and it's again long on the 5 minute chart and short on the 10 minutes chart
the these orders are going to the bank's
at the same time and even the trading servers at the same time so
there is no distinction between time frames where the orders are sent
so the conclusion is that the even if you do the perfect technical analysis for
your own trading frequency and time frame
that does not guarantee that everybody else will be thinking exactly the same
thing as you because they're looking at completely different data
also if you think it about it if there was a such a thing as the perfect technical
analysis and the perfect rating system that protects everything
you would not see any market analysts doing doing technical analysis
everybody would be trading that trading system by now only one robot would be
sold in the market
and everybody will be using that robot and there would be actually no one
losing everybody would be winning which is
impossible. So I just said that technical analysis cannot predict the future
so that means that technical analysis is useless right?
Well wrong thing analysis that one of the most useful
tools you have in trading and the reason is that in order to make money
ijn trading
you do not have to predict the future training is not about that.
Technical analysis is about understanding what's happening now in the market
Technical Analysis helps you understand and quantify
the relation of the current price
to the previews movement and it also shows you what the investors are doing
at the exact moment that your trading
This is enough for you to make money because trading is about understanding
the current
view of the market identifying high probability set-ups
that's the difference high probability not predicting
and using proper risk management
risk to reward ratios a correct
trading system and having the correct psychology
by using technical analysis in combination with the
aforementioned tools like your trading system
trading psychology and you risk management what you manage to do is
manage your losses when you're losing so that they are small
and when you win you win a lot more
or maybe you're losing and winning
the same amounts but you winning more than you the losing
this is what trading is all about
so that's the role of technical analysis in trading
it helps you identify proper set-ups proper high probability scenarios
and good entry and good exit. That's main reason why do we did videos
about risk management trading psychology and trading system system before
this video
because traders are usually concentrated on technical analysis
and we wanted you to be in the correct mindset
about trading before you actually start using technical analysis
now I am going to give you some basic principles that you need to follow when performing
technical analysis
that are going to help you to get the most out of it let's go to cTrader
here we see the chart of
an expert technical analyst or
or is it so? Technical analysis
that its this complicated is not going to get you anywhere
you should know that all technical analysis
and technical analysts and all traders get through this stage
when they try to find the super system that predicts the future
guys this doesn't exist. This chart here and the technical analysis that I have drawn here
does not tell you more about a correct set up
or the price action compared to this chart
which is very simple but that doesn't mean that it's
it will give you a wrong conclusion. So if your technical analysis
you see that it looks kind of like this you have way more
indicators way more
tools that there are very hard to
to understand and you get confused all the time and maybe you should
re - consider and try to do things simpler
a trading signal and a good
setup is not about about the complexity of your analysis
That brings us to the second point
when doing the analysis. Technical analysis is all about the price
price is the key if you'll have a
the kind of technical analysis that takes your
your mind off the price
then you're doing something wrong
all these indicators are drawn from the actual price
so a it's not like this indicator is going to be the magical formula that
looks at the the price and understands something different
what you will read in many books even forums is that
you're supposed to be using a lot of indicators and these indicators are
supposed to be confirming each other when you
have a trading signal so I'm using this commodity channel index that will confirm
my price R.O.C
so I will enter with an oscillator. Guys try to
search for you confirmations in the price
you don't need an indicator confirming another indicator
you can you can find your confirmation
if you look at the candlesticks. That brings us on the third point
you don't have to use more than one indicator
for the same thing if you are using 5 oscillators
I don't know what's the reason that you're doing that but if you
actually take the time to play with the indicator settings you can see that
you can make all five of them give you the same exact signals
you can use a indicator to
show you something specific like you can use in oscillator to see
to get some signals for a range market you can use some
one or two trend indicators to get signals for a trending market but but
having a lot of indicators of the same type same type
this is not going to get you anywhere in technical analysis
there are the many tools that do the same thing
it's not like there is one way to do something
it's not like you can trade retracements only with the fibonacci retracement
or you can trade trends using only a moving average
you don't have to use all the tools you can use one of the tools
that fits your training system and the
that way you're going to be more successful. That brings us to the next point
You should be you should try to play with the parameters
of the indicators that you're using don't read in a book that the indicator
has a default setting of this and I just use
whatever the default setting is or the recommended setting is, by playing around with
the indicator
and see in your training system you will see that
it's very often that a other parameters than the defauts
are better for exactly what you want to do next important principle is that you
need to
use technical analysis in proper context what this means is that
first try to identify the general high-level
move of the market and what do I mean by that
just as saying that you found a double top
pattern in the chart when it's not
in the end of the trend that double top is not going to be a reversal
same thing you if you see a hemmer candlestick that is in a low volatility market
and me this the should not be
any type of strong reversal or something like that so
try to concentrate on the context first that's very very important
especially for Japanese candlesticks and price price action you can not just
try to find random price patterns in the movement
and trading them. Lastly like we explained on previews videos
don't look at more symbols that you can handle don't look at more time frames
that you can handle
don't look at more screens that you can handle don't know at more
technical information that you can handle this all is just
taking your focus alway from the other important aspects of training
your trading system your risk management
and your trading psychology, so try to keep it simple with technical analysis simple is
not bad
so this was the theory that is supposed to get you in the correct
mindset
from using technical analysis tools now we're going to go to cTrader
And I'm going to show you all the types of tools that the
we will be using when doing technical analysis
and from there you understand what type of videos we're going to do in the
future when we
show every tool so let's go to cTrader
let's close this chart so
first and important most important type of technical analysis
the price action and Japanese candlesticks so
technical analysts look at the candlesticks and look at specific patterns
candlesticks show how the price is moving so you understand
how investors are thinking for example this is a
easy candlestick to explain
you see that it opened d here then the market drove forward
and it drove upwards so everybody was long
but before the hour passed everybody was
sort again and it spiked down again
that shows you that the market tried
to go up but it clearly failed because everybody then
went short so this is the type of candlestick analysis
next thing that I want to talk about is chart types
usually we use Japanese candlesticks but
we also have time frames which are very important I already explained
so I can explain again each time frame represents
the amount of time that you see in each of these trend bars
so you can use the appropriate time frame depending on the trading frequency
you want
another very important chart type
we in cTrader feature is tick charts
if I select tick charts every trend bar has a specific number of ticks
it doesn't represent time anymore
so this is about chart types and price action
and next thing is
support resistance lines and trendlines
these are very important tools and
there are very successful traders that only use these tools
and the main the main
good thing about about these tools is that they do not lag
at all and indicators usually lag trend lines don't lag
so trend lines are there to identify trends with horizontal lines you draw
support and resistance levels
you can sometimes draw a channel and
that's all you need about support and resistance trading it's another
type of technical analysis. Then we have the fibonacci
tools most common tool is the fibonacci retracement which is used to to
for you to identify retracements in a trend
there is also the fibonacci expansion tool. Fibonacci expansion has to do with Elliot
wave theory which we will explaining
in another video
its tries to find the next movement the next leg of the
their Elliot wave. There are also other Fibonacci tools which are less
famous we have Andrew's pitchfork which is about medial lines
we're going to talk about Andrew's pitchfork
next here we have some shapes
the best way to use shapes in cTrader what is very
very useful for me specifically is
I make this we say black and I
fill it's area an I kill the opacity so I make it completely black
what I can do this way is I can practice
on the weekends in a very
very cool way because now I don't see what the price is going
I can be doing my technical analysis normally without looking at the price
and I do everything I open my trades
and then I move the square and I see how the price is moving
so this is the best way to practice
if you're practicing like this
you not doing it properly because you already see what's going to happen next
Next tools that I want to talk about are
indicators, we have trend indicators
trend indicators are to help you identify trends
and trade trends we already about trends in a previous video
oscillators are there to help you identify
markets that are not trending and give you trading signals
Volatility indicators help you understand the market volatility
volatility is important in every type of market movement
Volume indicators are there to
to show you things about tick volume
tick volume can be an important tool to confirm your
your price action the bigger the volume the
the most possible a breakout for example cTrader also features custom
indicators
and we have done something great indicators are located in our cTrader
developers network
you can visit by clicking www.ctdn.com but
if you search for an indicator here bollinger bands for example
you will see that we automatically search
in cTDN and you can find
this indicator, it will automatically go to cTDN
where you can download the indicator here it is
you can download it and install it in cTrader so that's pretty cool
another tool s price patterns
for example we see here, what are price patterns? we see here a head and
shoulders
Let me just explain quickly this pattern so you can understand what the point is
the point is that the market is trying to go up
in then goes down, it tries for one last time
it goes higher so it's still successful but then it tries one last time but then it completely fails
then goes it goes below the previews high
that's a typical reversal especially if it's after a trend
so usually there is a point of resistance here
After it's broken like in this case
the price is supposed to go exactly the same pips below as it went above
which is
exactly here it's 10 pips and it went 11 pips
so this kind of chart patterns
lastly there technical analysis tools which are actually tool - less
without a tool selecting your
symbol based on it's volatility is done without tools but it''s also
technical analysis
selecting the time that you want to trade because
it some points and sometimes there is higher volatility and sometimes there is lower volatility
at some specific trading hours
this is also technical analysis
ok trading sessions is about about fundamental analysis
in this video we talked about technical analysis
we I explained how you should use technical analysis and the it's role in
trading
I also showed you the most typical tools
I think I showed you all the tools about technical analysis actually
maybe I forgot something
in the next videos we're going to be concentrating
on each of these specific tools that I showed you and we're going to be categorizing
and showing each tool , how it's supposed to be used on trends, how it's supposed to be used on range
on breakouts
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thanks for watching