Spatial Pattern Recognition Skills Are An Essential Trading Skill Set QUESTIONS

Calculating Costs to Determine True Profit

Most everyone who has studied something about Candlesticks can identify an Engulfing White. However, just being able to recognize an Engulfing White does not mean you have the skills necessary to use Candlesticks successfully.

One of the dismal realities of the Stock Market is that the retail crowd has at best a mediocre percentage of success rate trading stocks, regardless of whether they are a Long-term Investor or an Intraday Trader. A vast majority of new and beginning traders lose most of their capital and then give up. The reason the Retail Trader persists as a major Market Participant Group is solely the huge numbers, which are millions of independent Americans who try to learn to trade stocks.

Recently the Securities and Exchange Commission SEC has determined that a few “Retail Traders” are becoming more successful, and a few of those actually reach professional level percentages of success. 

Many Retail Traders are told falsely that if they have a 50% success rate, meaning half of their traders are somewhat profitable, they are fine. The reality is that no professional could keep his or her job at that percentage. The Professional enjoys a high income due to an 80-90% or greater success rate trading Stocks, Options, Commodities, Currencies, and other financial market instruments. They do this with extremely proficient Spatial Pattern Recognition Skills™ using Technical Analysis and Candlesticks in a relational manner.

How good are your Spatial Pattern Recognition Skills? Take this test and see where you are in the basics of Candlestick Pattern recognition skills.

Below are 3 charts with similar setups of Engulfing Whites, after a period of Consolidation.
chart example with similar setups of Engulfing Whites, after a period of Consolidation - technitrader


chart example with similar setups of Engulfing Whites, after a period of Consolidation - technitrader

chart example with similar setups of Engulfing Whites, after a period of Consolidation - technitrader

If you are setting .10 cents, .20 cents, or $200 per day as your goal then you are limiting your profit potential and one big loss could potentially be devastating. Calculating costs to determine true profit needs to include considering the cost of the trade, cost of software, transaction fees, brokers, and calculating how much are you worth an hour. Subtract the total number of hours you put into that trade plus every expense, which should include your home trading office costs as well. The net is your true profit.

Summary 

Unfortunately most Retail Traders never stop to do the math and are losing money every time they trade, even if the trade appears profitable before all expenses are subtracted.

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Trade Wisely,
Martha Stokes CMT
TechniTrader technical analysis using a StockCharts chart, courtesy of StockCharts.com


Chartered Market Technician
Instructor & Developer of TechniTrader Stock and Option Courses
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