The Benefits of Trading in Hindsight

by | Dec 16, 2021 | Trading Lessons

Key Takeaways

  • The role of pattern recognition in trading…
  • Think old charts don’t matter? Here’s why that’s WRONG!
  • How to help your future trading starting right now…

Hey! Bryce here.

“Hindsight trading” is kind of annoying. It highlights all of the things you missed in real time. 

What’s hindsight trading? In short, reviewing old charts.

But if you can get over the sting of missed trades, it offers great learning opportunities.

It’s sometimes difficult to see patterns developing in a chart before they actually appear. This often means not knowing a stock will go up (or down) before it already starts happening.

This is why hindsight trading is a great habit for traders to develop. Let’s break it down.

Learn Pattern Recognition

The more you study and review charts, the more you realize that they display similar patterns.

Patterns may repeat in the same stock, but you can see them develop in other stocks, too.

Studying charts can offer great long-term benefits to your trading … If you’ve seen a pattern before and can then recognize it developing, you have an easier time predicting where that stock could go next.

The beautiful thing about StocksToTrade is that you can draw on charts and export them. Create folders for charts by specific patterns — or whatever works for you. Then, take time to study them regularly. 

Eat, drink, and sleep charts. That’s how pattern recognition will click over time.

Understand How Charts Move

Spotting patterns is great. But what’s the use if you don’t have any idea of what it means for the stock’s price?

Does the price go up? Does it go down? Is it a huge move or a small move?

Looking for trading mentorship from Tim Bohen?

Take your trading to the next level with mentorship from lead trainer, Tim Bohen, in the SteadyTrade Team. 

With live webinars every market-open and close, access to the team chatroom, and strategy webinars with short-selling success Mike Huddie, you’ll have the help you need to build a strong trading foundation and reduce your learning curve.

This is also a good way to find watchlist-worthy stocks. If the moves are small, that may not be a stock you care to watch. But if the moves are massive, you know it has more potential…

Former runners often replicate past runs at some point. The exact patterns may not repeat … But once you nail pattern recognition, you’ll have a much easier time spotting one in development.

Plan For Future Trades

I already hinted at this, but identifying strong patterns and stocks that can move prepares you well for potential future trades.

Many of these moves just need a strong catalyst. Whether that’s news or something else, they often set up over a long period before moving.

That’s why I talk so much about consolidation. If a stock consolidates for a long period, that can be a sign the stock’s ready to run … Maybe it just needs a little push.

Once you have a better idea of what moves the stock and how far it might go, it’s easier to build a trade plan.

Conclusion

Let’s recap hindsight trading…

  • Study charts as much as possible to help train your brain to recognize patterns.
  • See what happens after the pattern develops to help determine the move and catalyst’s strength.
  • Tie it all together to help set expectations for potential trades.

Trading isn’t easy. I make mistakes all the time. But I can tell you it gets easier the longer you stick with it.

Nailing pattern recognition is clearing a huge hurdle. It doesn’t guarantee success, but it sure makes trading a lot simpler.

Stay the course,

Bryce Tuohey

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