In technical trading good practice is waiting for confirmation of a technical pattern. Or as Peter Reznicek said in a recent interview, “a specific technical event has occurred“.
Drawing lines on your chart is one piece of setting up a good trade. Patience is another importance piece.
The patience of waiting for a technical level to be crossed (and respected). Not jumping in the trade early. Not assuming where price will go. Being patient and waiting for confirmation of the pattern.
Carter Worth (from Worth Charting) captures this critical technical trading lesson:
I’ll say something elemental, so elemental as to be obvious, so obvious as to be stupid: Strength helps the pattern, weakness hurts the pattern. And one could say, what the hell is that?! Well, that’s the reality. Rather than presuppose, hey I think it’s going to break out let’s get long, or I think it’s going to fail here let’s get short. A good linebacker reacts to the ball, doesn’t think too hard. The point is just react to the ball here, don’t overthink it. If it’s strength and gets above the line, okay we play, if it starts to break down, we play, for now, pair of 2’s.Carter Worth on the Dow Jones Transportation Index chart on June 21, 2023, MRKT Call Podcast