EP 029: The science of technical analysis, verse the art of trading with Brian Shannon of @AlphaTrends

Aaron Fifield Podcast 5 Comments

This weeks guest is Brian Shannon, who first and foremost is a professional trader, whose involvement with the market dates back well over 20 years.

He’s also the author of the highly regarded book, Technical Analysis Using Multiple Timeframes. And thirdly, Brian is the founder of AlphaTrends, an educational company focused on teaching traders how to navigate the market successfully.

For the most part Brian is a swing trader, with the occasional day trade in the mix. During the interview Brian discusses both approaches, and gives a few pointers that may help you to discover the right timeframe for your own trading.

We also talk about understanding the psychology of market participants within well-known patterns, the two indicators that Brian uses most often (one of them being VWAP – Volume Weighted Average Price), and Brian also walks us through the 4 stages of a market cycle: accumulation, markup, distribution & decline.

So all in all, Brian hit on plenty of great topics, and I feel like you’re really going to enjoy the insight he shares with us!

“The market doesn’t care about what I think of a stock.”

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“I’d rather lose my opinion, than lose my money.”

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“Only price pays.”

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Lessons learnt in this interview:

  • Why we’re our own worst enemy in the market, often making poor decisions when we know better. Brian discusses what to do when you find yourself making decisions that aren’t smart.
  • Brian shares some of the significant losses and moments when he was tempted to give up trading, plus what he learnt from these experiences.
  • To excel as a trader, you must hold yourself accountable – you cannot complain about the ‘news of the day’ or market behaviour, after all you make the decision whether to trade or to sit on the sideline.
  • How Brian identifies potential swing trading opportunities, how he dissects charts using multiple timeframes, and makes his decision based on price only. Trust price action.
  • Why it’s more beneficial to understand the psychology of participants within patterns, than simply identifying the patterns themselves. Put yourself in the shoes of other buyers and sellers and ask ‘how would I feel if I was long or short there?’.
  • Brian explains the way in which he uses VWAP (Volume Weighted Average Price) to identify who is gaining or losing control of stock prices. And why this indicator is often used amongst institutions to time entries.
  • The four stages of a market cycle: accumulation, markup, distribution & decline. Brian’s framework to identify what’s happening during each phase, and why you should probably avoid a stock if you’re unclear of the current stage.
  • How Brian found a timeframe that was best fit for his personality, and some pointers to help you decide if you’re best suited to swing trading, day trading or otherwise.
  • And much, much more…

Links and resources mentioned:

  • Technical Analysis Using Multiple TimeframesUnderstand market structure and profit from trend alignment. Brian’s book is a complete guide to understanding market structure and the psychology of price movement.
  • AlphaTrends.net – To learn more about Brian, head on over to the AlphaTrends website.
  • @AlphaTrends – Also be sure to follow Brian on Twitter to stay up to date with his latest movements.
  • @AlphaTrends – And for users of StockTwits, Brian goes by the same handle.
  • Infographic – Here’s a link to download the full size infographic Brian mentions during the interview, that helps to identify the 4 stages of a market cycle.

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