Page 106 - THE MARKET WHISPERER

104 PART 4 - The Char t: Money ’s Footprint

buyers and sellers. Stock prices do not rise or drop coincidentally. As a
trader, I derive a great deal of pleasure from observing charts showing real-
time shifts, imagining all the people seated behind their desks all around
the world, buying, selling, and impacting on the price at the very moment I
am watching. This is a “war” of control over money and power, with victory
going to the person that makes the best decisions based on the information
at his or her disposal. I enjoy following the traps that buyers and sellers set
for each other. I see the errors and the successes and try to think what I
would do in their stead. Even a person with vast experience in the capital
market, but none in intraday trading, will find it difficult to understand
the logic behind intraday stock trading. Those with insufficient experience
might be satisfied with just attempting to understand and analyze the
weekly or daily chart. But in fact, intraday trading does have its logic, and
plenty of it. The more screen-time experience you gain, the better you
will understand what drives the bears and bulls influencing the stock, the
more you will become acquainted with the intraday logic, and the greater
your self-confidence will increase--to the point where you too will join the
war. Every move the day trader makes, whether buying or selling, is based
on chart patterns that we will learn, and on outcomes that represent the
trader’s evaluation of the war’s outcomes as plotted on the chart.

Using charts now seems to me the most natural and obvious thing. How
can we possibly manage without them? But that is not how things were
in the past. Up until one hundred years ago, almost no charts were used.
Quotes of stock prices reached the trading room by telegraph, a designated
clerk wrote them down on a large board, and the previous price was
erased. Successful traders were those blessed with excellent memories.
Over time, it became understood that a connection exists between the
past and future behavior of a stock price.Some traders began charting the
information, seeking recurring outcomes. The use of charts began to make
greater headway as famous chart-based theories began developing, such
as the Dow Theory and the Elliot Waves. In the 1960s, charts became
increasingly prevalent with the advent of the first industrialized computers.

Several accepted norms exist for presenting prices on charts. Different
traders choose different methods, but most of them, especially day traders,
almost exclusively use the “Japanese Candlesticks” method which will later
be elaborated. Several of the methods are described briefly below, by way
of initial introduction