Why Reading Charts Is Better Than Reading News or Fundamentals

BITFINEX:BTCUSD   Bitcoin / U.S. Dollar
Traders are usually divided into three different classes: First. Those who operate on what they hear. Second. Those who trade based on solid facts. Third. Those who base their commitments on supply and demand .
In this story, we will look why traders who follow the news or analyse fundamentals usually end up blowing their accounts and the most successful class of traders are those who read charts.

The first type of traders, who operate on what they hear or what is being told to them make up the great percentage of unsuccessful traders. In other words, they are a bunch of lazy people who are not bothered to put the effort to read the markets and base their analysis on it. These people come to trade the market hoping to get something for nothing; they are always hungry for tips and listen to every rumor that is being talked about. If there is one more thing that is more important for than any other by this class of traders, it is “inside information”.

News can be defined into two classes: the known and unknown. The known news is what we usefully listen to over different news channels, such as CNBC or Bloomberg, and the Internet. Known news can also be defined as what has happened and has been told to everyone. It becomes public property the moment it’s broadcasted. News known to everybody is, expected to be useless for anybody most of the times. Yet, traders are always thirsty for news, talks news and also trades on the news. However, on the other hand, unknown knows consists of important information and facts that are only available to few traders. These traders are known as “insiders” who works with a great advantage. Reports of earnings , reduced or increase in dividends, etc. must always be known to few people, before the news is publically announced.

This brings us to the second class of traders. Traders who operate in the market based on solid facts ( earnings , growth etc.). They aim to buy when prices are low and select stocks with consistent dividends and growth. These classes of traders are way successful than the first class, which operate on what they hear. However, when they mix with these estimates of values, the so-called fundamentals analysis, they tend to enter or exit the markets at wrong times.

Wyckoff once stated: Even J.P Morgan himself does not know how the street will take a certain announcement or what the impact of his buying and selling will be. Always keep in mind that no one can predict what the supply and demand will be 5 seconds, 5 minutes or 5 days ahead. No one knows what will, in the future induce others to buy and sell. This is why no one can predict the market with 100% accuracy, not even market manipulators.

One thing you could know is what large operators are doing and what are the supply and demand levels are. They are all reflected on the charts. Every transaction has its part in forming supply and demand or in other words support and resistance levels. The greatest supply usually comes from outsiders close to the bottom of the breaks and in panics. The supply from insiders usually appears on the top of the small rises and at the finish of booms. The demand is just the reverse. A trader must be able to judge when a movement has run its course.

So what characteristics do you need to become a great trader? You must perfect yourself in clear thinking, quickness, and accuracy of judgments. Richard Wyckoff concluded that the losers are principally those who trade on what they hear, as well as those who work on facts or what they think are facts. The most successful class of traders are those who work on Supply and Demand or simply, read the charts.

The above article was greatly inspired by a story written in The Magazine of Wall Street that was founded by Richard Wyckoff in 1907.
All charts posted are for educational purposes only - I don't sell signals or give any courses. Enjoy :)!
I like your chart,and I have followed you. I hope you can Follow Me at the same time.

+1 Reply
travel-nomad Ronnie_Dong
@Ronnie_Dong, my appologies for the +1 but I can't delete, it was by mistake. I defenitely don't agree with begging for follows...
Some of this sentiment has already been repeated previous to me. However, I will throw my own two sense into your post and add to the collection of statements below, since I found your article very thought provoking and interesting, and I thank you for that! You stimulated me into typing this information off the top of my head!. First, 80-90% of what you indicated definitely does not apply to cryptocurrency market. The way we perform valuation is not from the average wall street trader mentality like Richard Wyckoff. Most of what you presented sounds like you read it from a wall street internet website or some type of book.

Cryptocurrency is a speculative asset class and market in which nothing is bold, clear and certain with truth or facts. TA provides 50% of our decisions and the other 50% on news, fud and historical data and primarily youtube. Those resources help us decide in a more practical way how, what or when to invest in a cryptocurrencies. Not to sound like I'm bashing you or being a troll, but your story/statement above are majorly flawed here! You can't take everything you know in wall street trading like reading balance sheets and growth charts and determine which corporation issues out the best dividends, because that data simply does not exist in crytpo! You have to remember this is something completely revolutionary! Therefore, what we should do is to devise and design new valuation methods for cryptocurrency that can be used as a general basis for valuating crypto. One valuation that i have borrowed comes directly from my buddy Aristotle, may he rest in peace which is hundreds of years older than your reference from 1907 from Richard Wyckoff, the famous trader who has it all wrong with today's new birth markets and revolutionary block chain technology!

For example Aristotle (384 BC – 322 BC) was a Greek philosopher, a student of Plato and teacher of Alexander the Great..

He said money should be the following:

1. Durable
2. Portable
3. Divisible
4. Intrinsic Value

All of which Bitcoin and some cryptocurrencies have in comparison to other commodities. This is primarily why I believe in bitcoin in particular. In this example, we can take a 1,000 yr old analogy of what money should mean and how it applies directly to bitcoin. Despite the counter arguments of wall street investors and anti crypto fans. So my point in my article here is simple! You have to adapt yourself to this new market and design new parameters for new valuation, recreating new valuation methods by borrowing a super strong one like the example i just stated above from Aristotle if it passes each and every single item I described. Then, add your own thoughts and apply it to the market your are directly in. Its interesting to see how George Soros said we were in a bubble in Feb of 2018 and now rumors are spreading that he will trade crypto. I can go on and on with so many other wall street fat cats like Jamie Diamond from Chase etc etc.

I had an MBA guy recently tell me that he was having trouble figuring out the value of a block chain company therefore he wasn't going to invest! Since their was no real data similar to Wall street. Well that data does not exist right now for some of these ICO new born cryptos. Does that mean we should not invest in crypto? The data will exist later when they have been around for a few years.By then it will be too late for most to invest in order to maximize their profits. Lets take for example, the huge giant like amazon. I've repeatedly read that they make no profit year after year! Well that might be true on paper but it doesn't mean its not a good company to invest in! Their stock is actually worth as of Apr 10 4:00 PM ET $1436.22.

So a trader should not be rigidly categorized as you conveyed in your article. Especially since you made it sound like crypto traders have no idea what they are doing by quoting Richard Wyckoff who said the losers are principally those who do not trade on facts and basically are winners if you only study supply and demand and TA charts!"

We invest with the resources we actually have at the moment. To provide a clear example right now I hold a position on XVG verge. Some have already made hundreds or thousands or millions on the rumor regarding the announcement that will be provided by April 17th, which also happens to be tax day in the USA! I could care less if its BS or real and the partnership becomes amazon! I already have made most of my profit and have begun scaling out! Hence, "buy the rumor, sell the news" As long as you make money legally in trading it doesn't matter how you achieved it! Notice I did not indicate insider tips or pump and dumps which I consider wrong and illegal! Regardless, on how it all ALL happens. SOLID FACTS OR NOT! To be a good trader in crypto you have to try to learn and know even the smallest fud, tips or news to have an edge at profiting in a super tough bear market like now! Cuz that can make the difference of a few hundred to a few thousand dollars or even millions! Richard Wyckoff is dead wrong saying that those who trade on what they hear, as well as those who work on facts or what they think are facts are the losers! Thats all hogwosh wall street trading theory! IT NEVER APPLIED TO CRYTPOCURRENCY! We cryptourrecny traders are not the same! We are contrarians by nature, we see what others simply can't DARE or want to see! We adapt to markets and follow the trends, the hype, the news, the fud, the charts and anything else that will accomplish a profitable trade. We are a special group of traders, not be remotely considered equal or less than our wall street counterpart trading friends! We dig for the gold where no else has even bothered to look!

Woof! You got me rolling brother. I enjoyed your article , don't be offended and always be prepared for a debate when you post with such a definitive style!

If anyone wants to follow how I profit in crypto follow my videos and TA,

Yours truly,

+3 Reply
Welcome back brother Abdulla
Interesting to read, Good Job!
+4 Reply
glad to see you back! : )
@team_USA, thank you :)
What a great read thanks for writing and sharing. I try and look at all perspectives and take note of all methods and ideas that i come across, as I am still in my beginning stage as a trader and have yet to develop my style. I take things like this to heart far more than random peoples bias opinion on this or that.
Technical analysis simply doesn't work when fundamentals are at work. Any experienced trader will tell you that.
+2 Reply
proficy redwave
@redwave, fundamentals give direction, money going in or out of an asset. Supply/Demand (TA) tells you how that direction will work through resistances and supports. TA is basically the emotional side of the market, otherwise we would just have straight lines.
+2 Reply
Home Stock Screener Forex Screener Crypto Screener Economic Calendar How It Works Chart Features Pricing House Rules Moderators Website & Broker Solutions Widgets Charting Solutions Get Help Feature Request Blog & News FAQ Wiki Twitter
Profile Profile Settings Account and Billing TradingView Coins My Support Tickets Get Help Ideas Published Followers Following Private Messages Chat Sign Out