What does ‘neophyte’ mean?
A neophyte is someone who is new to a skill, subject or belief. The origins of the word are from Ancient Greece, a period in time I find fascinating.
What’s your view on Technical Analysis?
I love Technical Analysis, it fascinates me in all its manifestations. However, I don’t think most of it is useful for a new trader who is using leverage for the first time.
You are pretty harsh on things like support resistance, why is that?
I realise how attached most traders are to this discipline, but IMO if we’d respect every single support resistance line on a chart we would be either taking profits all the time or simply too fearful to ever trade!
Also, there are so many different approaches to the subject it can overwhelm the newbie.
What is Simple Pattern Trading?
It’s a style of trading, that emphasises opportunistic entry rather than a risk-averse or trend-following approach. In requires no backup or confirmation analysis.
My theory is the breakout or breakdown of the pattern is all the confirmation you need. Anything else leads to decision fatigue.
However Simple Pattern Trading uses an aggressive trailing stop loss strategy, to account for the fact we are sometimes trading counter-trend.
What do you call short-term?
Short-term is anywhere from one day through to ten days. But it really is all about when a trade is closed out with a trailing stop. If that’s a month from now, then great.
Can your setups be used on weekly charts?
Yes, and to great effect. The same rules apply to weekly charts, as to any other timeframe.
A weekly trade could last one week, it could last ten, all depending on what the market gives us.
Why do most new traders fail?
Trading is inherently psychological and the more mistakes made the heavier the burden of performance anxiety becomes.
Most beginners are in such a rush to make money, they start picking up bad habits from the getgo which at some point bite them on the butt.
How is it best for a new trader to begin?
Slowly, and with a mentor (if one can be found). Pursue it like you would any other serious endeavour – unlike the majority of new retail traders.
Should I trade a virtual account first?
Absolutely. Learn to get the feel for the platform, the markets, and your trading system.
If you are not making money on a virtual platform then forget real money for the time being. The idea that virtual accounts don’t give you a true feel for the market is true, but even pilots begin in flight simulators.
Are mechanical systems best for the newbie?
Yes. They can be backtested easier. Besides position sizing, there is no decision-making process; which means if the trade loses there are not endless hours beating yourself up over a decision.
Who should learn to trade?
Anyone who wants to. It is a fantastic life skill. By learning in the right way most people of average intelligence can be successful.
Is trading difficult to learn?
Is driving difficult? Most of us can drive a car and don’t think anything of it. Trading is only difficult because we never had someone in the passenger seat coaching us.
Why write TradeNeophtes?
I wanted to set up a blog for a long time about the markets.
But writing market analysis would be very boring because all I use a mechanical approach. I rarely ever take a view on the market.
Fundamental analysis is interesting but it changes to little to make for an interesting read.
That only left me with one option, to impart what little I know about actually trading.
I really want anyone who reads this to learn from my mistakes and implement anything they like.