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Trading Tools and Tactics: Reading the Mind of the Market by Greg Capra

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Chapter 7

Bar-by-Bar Analysis

Each Bar Tells Us Something

Trading, or understanding the markets, is really not about absolutes. Each time period in the market is like a fingerprint; it is unique and will never be reproduced exactly. Trading is not about guarantees. Many aspiring traders spend a good deal of their initial time looking for the Holy Grail to guarantee the success of all future trades. No such Grail exists, at least not in the form that most traders are looking for. If there was one, I would have found it by now. Trading is not about exactness, although we all start out seeking to gain certainty that our trades will work.

Many traders new to the market carry the habits of prior professions with them and continuously look for the precision that comes from accounting or engineering or a similar profession. The market does not tolerate this type of approach. Trading is about understanding probabilities. The only way to really get an edge in the market—all that I do in the market and all that we teach at Pristine—is to find patterns that have high probabilities of a certain outcome.

So far, the chapters in this book deal with finding certain occurrences on charts and understanding that, once the proper setup is in place, there is a higher probability that a certain series of events will follow. The further in the future we try to extrapolate those probabilities, the less accurate they will be. Another way to state this is that the highest degree of probability exists ...

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