Stock prices yo-yoed again today, as swings of 100 points or more in the Dow Industrials seem like the new normal. In the midst of this kind of volatility, many traders turn to technical analysis for a credible explanation.
Peter L. Brandt is a professional trader who recently had an independent accounting audit of his annual IRS tax statements across his 18 years of trading. It verified an average annual return of +41.6%. This period included the dot-com bubble and the financial crisis of 2007-2009.
Here's Peter's take on the usefulness of charting one's trades (excerpted from his trading blog):
Charts are a record of where prices have been. At any given time a chart reflects the opinions of all market participants who have acted upon their opinions by buying or selling commodity contracts, foreign exchange pairs, stocks, ETFs, debt instruments, etc. . . . Over time a bar chart reflecting this buying and sell may form a recognizable geometric configuration. These geometric patterns can be useful for trading … to a point.
In other words, recognizing a chart pattern is only part of the process.
Brandt is a top commodities trader and one of a select few contributors to Bob Prechter's Elliott Wave Theorist. He achieved his impressive track record with discipline and remarkable conservatism.
Now in semi-retirement, Brandt shows up-and-coming traders the ropes on his blog and at his live seminars. He candidly dispels market myths:
You need to know that 90 percent of the content on the internet is garbage. You need to be prudent and wise consumers of internet trading content. Advice is cheap and way too plentiful. Guard your mind as you guard your trading capital. Choose well who you listen to.
Join Peter and a small group of other traders to learn the most important yet often overlooked ingredients of trading -- most of all the "human" element, which is rarely mastered but indispensable to long-term success.
Veteran commodities trader & author Peter Brandt, back by popular demand, will host a second session of his trading boot camp, "How to Trade for a Living: Lessons in Long-Term Success from a Professional Trader," in Orlando, Dec 1-3.