Is Technical Analysis enough to profit from the financial markets? Here's the truth and it's not what you think...
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1:00 To find out whether it works we have to compare it to a benchmark. Okay, so the benchmark that we will compare against is the S&P 500. So we can see that historically S&P does about an average of 9-10% a year with a maximum drawdown of 55%. So there are two ways, right, we can so-called beat the benchmark.
1:30 To find out whether we can beat the market is we are going to go with a simple strategy. In this strategy, that I choose right, it's a momentum strategy. Okay, so basically, it looks to buy high and sell higher. Momentum. So these are the rules of the momentum trading strategy.
4:00 Clearly, technical analysis work. So yes, technical analysis work, but I want you to think about something alright. Is that all you need? For all to answer is no and here's why. Number one. Risk management.
5:30 The second thing, psychology. Why do I say that? Because imagine this. Imagine at this point in time, right, over here, 2002, alright, in May you are down 3.9%. You might think, "Oh, it's nothing right. I can survive. No use, it's only 4%. Come on. Gorilla two is here. Then you're down another 0.5% in June and by a scratch, right? I can do this.
6:00 Let's do a quick recap, right. Number one, yes technical analysis it can work. Right, I just shared with you a very simple momentum strategy that actually beats the market over the last 28 years. Very simple strategy. Even, you know, a 13- or 14- year old kid can understand. But I shared with you that if you don't apply proper risk management, if you're over-leveraged, if you are risking too much per trade, right you will not survive the drawdown. That's a fact.
7:00 Another thing is the psychology, right. You can have the best trading strategy in the world, but if you can not handle the emotional drawdown that comes with it, you can not handle the losses, right, the negative punches that the market is giving you, even a trading strategy with an edge right will not save you as well. So I hope by now you can understand that yes, right, technical analysis can work by in itself without fundamentals, without analysis, without anything. But you must have the proper risk management and the right training psychology. Okay?
8:00 So with that said, right, I've come towards the end of this video. Even a little more about what I do, training strategies, and techniques right. Go down to my website over here: tradingwithrayner.com. Okay and if you just scroll down to the bottom right somewhere here. I've got a couple of trading books that you can download, right, The Ultimate Trend Following Guide to Right Massive Trends in the Market and The Ultimate Guide To Price Action Trading. So what we have covered a little is more of a trend following at momentum trading.
10:00 So if you are more of a discretionary trader, right, you know more about market structures and support resistance than The Ultimate Guide To Price Action Trading is for you. Click on this blue button and I'll send it to your inbox.
So with that said, right, I've come towards the end of this video any feedback comment. Let me know it in the comment section below and if you've enjoyed this video hit the like button! Bam Bam! And subscribe to my Youtube channels so you can get more of such videos every single week. So with that said I wish you good luck and good trading. I'll talk to you soon!