“You can know the name of a bird in all the languages of the world, but when you’re finished, you’ll know absolutely nothing whatever about the bird… So let’s look at the bird and see what it’s doing – that’s what counts. I learned very early the difference between knowing the name of something and knowing something.”
… Richard Feynman (1918 – 1988)
And that quote just beautifully sums up the difference between me and most of the “pattern” traders.
You may be able to recognise and name a pattern, but do you really know what is happening within the market? The pattern is just the footprints of the past. The future will depend on the way that trader sentiment and decision making drives future orderflow.
Are you really understanding price movement?
Or are you just assigning names to it? And then reacting in mechanical fashion to the name?
An excerpt from theYTC Price Action Trader:
A better way to trade is to understand the CAUSE of price movement.
Understanding CAUSE allows you to identify potential moves as or before they occur.
Understanding CAUSE allows you to enter a price move earlier.
Understanding CAUSE allows you to understand why a price move is occurring.
Understanding CAUSE allows you to assess when a move is likely to continue and when it’s likely to end.
Understanding EFFECT only, means that all you can do is react to what has already occurred, usually well after it has already occurred, and then simply hope that sufficient profit potential is still available in the move.
I’m asking you to take three steps!