Ghost Trading Helps Qualify a Trade
Most good traders do more watching than trading. The guerilla may be the exception. While you are watching you can do the live equivalent of bathtub analysis, ghost trading.
My trading method requires that I make price projections on the charts. I probably make 40 or 50 during a typical trading session. Charles Goodman called this ghost trading. Most never happen. But when they do occur, I know I am 'in sync' with that market process.
"If you don't look, you won't see." As you watch the markets, ask questions and make predictions -- even if they are silly ones. "What happens if the high of the last swing is taken out? The low? If this is a good PTS forming, then it should do this soon."
Only then, watch. You have gone proactive by asking a question. Waiting for the answer requires you to be more alert to what is happening in that market. You are, in effect, paper trading without even touching the order button.
Chart formations always look great in the textbooks, but many of them do not work. We do not see them when they fail for two reasons: (1) A broken formation will not look like the formation at all -- one has to be very objective and proactive to see them; and (2) we want to see only what we want to see, especially if we are only passive observers. Traders often fail for not understanding this fact. Bathtub analysis, ghost trading, and being proactive with your charts will keep you from being one of them.
Tip: Ghost trading is a form of qualifying a trade candidate. The more your hypotheses are proven correct by subsequent chart action, the higher your confidence can be that you are in sync with that currency pair and the market process.
By Michael Duane Archer