Dear Trader,
I won't take much of your time.
I want to share with you three revealing observations about trading.
Firstly, over 90% of active traders lose. It's shocking, but true.
Secondly, much of what has been written, spoken and presented about trading, doesn't work.
And thirdly, much of the most convenient, popular and easily accessible trading tools available today, indicators, don’t work.
The unfortunate truth is that a NEW approach is required for trading education.
Undertake my introductory video course, The Truth About Trading and LEARN, amongst many revealing insights, why despite 100s of books written on traditional technical analysis, the majority doesn't work.
Take for example the ubiquitous "reversal day" pattern everyone learns in the 100s of 101 Technical Analysis books and courses available.
This simple reversal day pattern is taught as a foundation stone of technical analysis.
Every student is taught this iconic pattern.
The only problem is that when examined closely it doesn't appear to prove a reliable tool for identifying reversals.
Let’s take a close examination of this iconic pattern and see what evidence is available to support it’s inclusion in the Technical Analysis Hall of Frame?
To measure the effectiveness of this "iconic" reversal day pattern I'll look to exit at the first profitable opening.
Let me run the pattern over my universal portfolio containing 24 markets from 1980 to present.
Wow.
Not good.
Well how about that. A corner stone, and some say a key stone, of Technical Analysis, the iconic reversal day pattern flat out doesn't work. It doesn't have an edge despite its preeminence in Technical Analysis literature.
But hang on.
I hear the disciples saying ...
"Well Brent that's unfair. To look at the effectiveness of a pattern identifying tradable reversals, you first need to place the pattern in "context". You first need to identify appropriate market structure where a reversal is likely, and then examine the pattern. You just can't run it straight against an unfiltered data set. It's not appropriate. It's not professional. Your analysis is flawed".
Well I think I can and I did.
But to listen to the doubting Thomases let me give the pattern some "appropriate" context to examine its effectiveness.
To provide context and allow the pattern every chance of success of identifying a reversal I'll place the pattern in a simple trend continuation strategy.
The strategy will look to enter a trend continuation following a retracement and appearance of the "reversal day" pattern.
I'll use a 200 day moving average to define the trend.
I'll use an opposite close of a 34 day moving average to define a retracement.
I'll then use the appearance of a reversal day pattern as a setup to enter a trend continuation trade.
To measure the effectiveness of the reversal day pattern I'll look to exit at the first profitable opening.
Let me run the strategy over my universal portfolio containing 24 markets from 1980 to present.
I think the results speak for themselves.
As they say a picture paints a1000 words.
I rest my case.
The pattern, straight out, even within an appropriate context, doesn't work, despite its celebrity status.
Now despite the negative performance this reversal pattern has been lavished with iconic status. Yet despite it being written about in 100s of trading books, and being taught by 100s of trading educators, and despite my strategy giving it every opportunity to work in terms of market context, it doesn't!
To my mind the reversal day pattern does not deserve its place in the Technical Analysis Hall of Fame. :o(
So every trader needs to ask themselves, if this is the most talked about, written about and taught about iconic tool of technical analysis, and it doesn't work, what else within TA doesn't work?
I believe it's TIME for a reset in trader education.
Regardless of whether you're new or experienced, it's TIME to LEARN what actually works.
Don't continue to, or become part of the 90% of traders who lose.
Act now.
Purchase 6-month access to my introductory video course - The Truth About Trading, and receive the BEST trading education available today.
Receive an extensive education in money management, methodology and psychology.
Following my video course you’ll walk away with a NEW tool box full of simple and effective universal tools that are 100% based on price.
You’ll walk away with a NEW, simple, evidence based and indicator free development methodology that is also 100% based on price.
It's time to get back to basics because it's the simple ideas that work, stand the test of time and result in sustainable trading!
My introductory course contains over 9 hours of videos. I believe it will represent the best value you have ever spent on your trading education.
Yours sincerely,
Brent Penfold
Futures Trader
Futures Adviser
Director, Brent Penfold Futures Pty Ltd.
E: bpenfold@tpg.com.au