The three realms of technical analysis, from 'seeing the mountain as a mountain, seeing the water as water' to 'seeing the mountain still as a mountain, seeing the water still as water'.

The three levels of technical analysis, from "seeing mountains as mountains, seeing water as water" to "seeing mountains still as mountains, seeing water still as water", is a process from entry to mastery, and then to returning to the origin, revealing the continuous sublimation of traders' market perception. These three levels are not only applicable to technical analysis, but also reflect the traders' growth path.

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The first level: seeing mountains as mountains, seeing water as water (the beginners stage of technical analysis)

Characteristics:

Beginners are full of freshness and confidence in technical analysis tools and theories, believing that indicators and methods are omnipotent.

The understanding of technical analysis mostly remains superficial, such as Candlestick patterns, moving average crossovers, RSI overbought and oversold simple rules.

Traders tend to mechanically apply indicator signals, overlooking the complexity and diversity of the market.

Performance:

Believing that technical indicators can accurately predict market trends.

Seeing golden crosses as Buy signals, death crosses as Sell signals; entering the market on breakouts and setting stop-losses on pullbacks.

Blindly pursuing the "accuracy" of indicators, lacking an overall trading system and risk management awareness.

Limitations:

Due to lack of experience, it is easy to fall into the trap of over-reliance on indicators, neglecting deep factors such as market sentiment, capital trends, and so on.

Trading failures are often attributed to indicators 'failing', without realizing the uncontrollability and randomness of the market.

Recommendation:

During this stage, it is necessary to learn more about the basic theories and tools of technical analysis, but do not completely rely on indicators. It is important to flexibly apply them in combination with the actual market conditions.

Reviewing past trades more frequently, understanding the limitations of technical analysis, and gradually accumulating trading experience.

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The Second Realm: Not seeing mountains as mountains, not seeing water as water (the perplexed stage of technical analysis)

Characteristics:

After going through the initial application of technical analysis, traders begin to realize that the market is not as simple as they imagined.

Indicators often 'fail', market volatility, false breakouts, and false signals confuse and perplex traders.

Starting to question the effectiveness of technical analysis, believing that the market cannot be predicted through fixed tools and methods.

Performance:

Losing confidence in technical analysis methods, attempting to find new methods or completely abandoning technical analysis.

Frequently switching trading systems, even trying fundamental analysis, algo trading, and other methods.

May fall into a 'trading theory obsession', continuously learning new trading theories but finding it difficult to integrate.

Limitations:

It is easy to fall into the trap of pursuing the perfect system, hoping to find a forever accurate indicator or method.

Lack of understanding of market randomness, overly focused on the failure of specific signals, while ignoring the importance of risk management.

Recommendation:

Recognizing the uncertainty of the market and the limitations of technical analysis, accepting the necessity of 'trial and error' in trading.

Viewing technical analysis as an auxiliary tool rather than the sole method of predicting the market.

Start building a complete trading system, including risk management, capital management, and psychological control.

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The third realm: seeing mountains as mountains and water as water (the sublimation stage of technical analysis).

Features:

After experiencing questioning and exploration, traders have gained a deep understanding of the essence of technical analysis, no longer pursuing perfection, but focusing on practicality.

Understanding that the core of the market is "probability", not "certainty". Technical analysis does not predict the future, but helps to increase win rate and manage risk.

Developing a trading system suitable for themselves, being able to flexibly use technical analysis tools, and combine market logic and capital management.

Performance:

Technical analysis becomes simple and efficient, no longer excessively relying on complex indicators, but focusing on core elements such as trendlines, support and resistance levels.

Understanding that the essence of the market is human nature and emotions, thus paying more attention to the relationship between price and volume, market behavior, rather than just technical signals.

When trading, having a set of rules but not being rigid, able to make decisive decisions while maintaining flexibility.

Core Philosophy:

The role of technical analysis is to identify higher probability trading opportunities, not to predict every move of the market.

Trading is about managing uncertainty, not eliminating it.

Recommendation:

Simplify to the core, not pursuing 'more' and 'all' indicators, but focusing on a few key tools, such as candlestick patterns, trendlines, moving average systems, volume, etc.

Learn risk control; clearly define stop-loss, take-profit, and position for each trade.

Maintain trading discipline and stable mindset; focus on long-term profitability, not short-term fluctuations.

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Summary of the three realms of technical analysis.

1. The first realm is the entry stage, full of confidence in technical analysis methods but operating in a more mechanical manner.

2. The second realm is the stage of confusion, discovering the complexity and uncertainty of the market, and starting to question technical analysis.

3. The third realm is the stage of sublimation, with a profound understanding of the market, simplifying analytical methods, and focusing on probability and risk management.

Traders go from the simplicity of "seeing a mountain as a mountain", to the confusion of "seeing a mountain not as a mountain", and then to the enlightenment of "seeing a mountain still as a mountain", which is the growth journey of technical analysis and even trading philosophy. Ultimately, the success of trading lies not in the tools themselves, but in the understanding of the market and the cultivation of the inner self.