Pick up any book or magazine on trading and you'll find carefully chosen examples of charts that would have made you a fortune had you only followed a particular trading method. The danger in reading such material is that it presents a false reality of the marketplace. Trading can be a wonderful way to make a living as it's challenging, stimulating and most of all extremely profitable when done correctly. When done incorrectly, trading can be one of the most horrific and mentally draining occupations one can be involved in.
The question that comes to mind is, what is the correct way to trade. The answer is simply there is no correct way. What works well for one person may not necessarily work well for another. For example, we are told never to pick tops or bottoms, yet for some traders picking tops and bottoms is the very essence of how they make their money. We are told the big money is made in catching the large monthly and weekly swings but for other traders daytrading is how they are able to accumulate wealth. The correct trading method would be one that fits the individual which is why you must understand who you are and what your goals are before you can commit to a trading method or style. It is this very reason why many traders find trading to be so frustrating as this is similar to trying to force a square peg into a round hold and then wondering why you're having such difficulties.
The same thing applies to market indicators,oscillators and charts. There are many traders who absolutely love the stochastics indicator,RSI, CCI etc. while other traders would say these indicators are a complete waste of time. Some traders swear by point and figure charts while others prefer to be enlightened by candlesticks. So as you can see there is no correct path. Only you will know what works for you and what you are capable of committing to. I myself as a trader have evolved over time in terms of knowing what works for me and what doesn't. Show me a market profile chart and I will be totally in the dark as to what I am looking at. Show me a chart of a stock compared to the S&P500 and I can tell you if this stock is worth buying or not as my method of choice is relative strength. Trading with relative strength has always been something that has made sense to me. I repeat "has made sense to me" but does this mean that this is the correct way to trade? Well for myself the answer is yes but for someone else trading with relative strength might be the worst thing they can do as a trader.
Here are a few ideas that may help you find your path as a trader:
What are your goals? Are you looking to simply supplement an existing income with trading or would you like to trade full time?
Are you more of a fundamentalist or technician?
Do you prefer to trade currencies, bonds, stocks or commodities?
Are you a quick thinker who would prefer the stimulation of day trading or are you more of a person who likes to think things out for a bit where investing over a period of weeks might be the way to go.
Does a bar chart make sense to you or is a line chart based on the closing price all you need.
Do you prefer to trade breakouts or are you looking to fade extreme moves which by the way is a very difficult trading approach yet works quite well for some traders.
Are seasonal tendencies or cycles in the marketplace something you can relate to?
Can you tolerate the large gaps that one may experience when position trading or are you much more comfortable day trading where all positions are exited by the close?
Are you willing to take full responsibility for your trading decisions or do you wish to subscribe to one of the many newsletters which provide trading advice as well as trading recommendations.
Are you trading to prove how smart you are to your mother-in-law or are you trading because you truly have a passion for the markets and would like to make a living doing something that you really enjoy.
As you can see the list can go on and on but the most important question one could ask themselves is who am I, what are my goals and what am I capable of. My advice is to expose yourself to many different trading styles and methods by reading books or attending seminars and see which methods literally click with you. I think if you take a long hard look at yourself, you might not only discover what kind of trader you are but what kind of person you are as well which in the big picture may be your greatest discovery.