New technical analysts need to focus on emotions and risk-reward ratio: Martin J. Pring
Martin J. Pring entered the financial markets in 1969 and has grown to become a leader in the global investment community. In 1981, he founded Pring Research and began providing research for financial institutions and individual investors around the world. He is the author of several outstanding books, including 'Introduction To Technical Analysis', 'Martin Pring On Market Momentum', and 'Technical Analysis Explained', which now in its fourth edition. Since its first appearance in 1979, 'Technical Analysis Explained' has established itself as the premier guide of its kind among technical analysts.
1. This is your third trip to India. Tell us about your experience.
I have had a very good experience in India. I liked Indian food and people, of course.
2. How do you like Technical Analysis (TA)?
It is the charts. I like the fact that you can analyse charts and, in terms of the market, you do not need to know what you are analysing. However, in fundamental analysis, you have to get into the facts. But the charts are very clean, they are either upward or downward. What attracts me the most it the beat of price - the price action.
3. As a first-timer, what was the real turning point in your trading journey?
I became a broker. We had bad research in our company and it was fundamental research-based. There was a very good library in my office. I went there and picked up Edwards & Magee’s classical technical analysis book and read it. It was a fantastic book and revealed some fantastic crafts to undertake. This is how I got into the technical analysis. I get confidence from the fact that, if I am using technical analysis, at least my clients do not have to use the company’s horrible research.
4. How do you see the evolvement of TA in the modern markets?
I think, with technology, technical analysis is getting faster. We used to check monthly and weekly charts, and of course daily charts. But now, we are looking at tick charts, minute charts, and 5-minute charts. These technologies make technical analysis more popular as we cannot analyse fundamentally on an intraday basis.
5. There is a common myth that TA can be used only for short-term trading and now, it is time to bust it. Along with macro and long term analysis, how can TA be used for examining inter-markets and cross-asset relationships?
No, it is better for longer movements. The identification of the long term trend is rather easier than short term trends because short term trends have some random noise.
6. How do you see ‘Equities as an asset class’ relatively performing against other asset classes over the next 5 years?
I do not think I can answer this question because, in technical analysis, there is no way you can predict how long a trend is going to last. Today, I can say stocks are performing well, and I will say it will remain so till indicators are positive but I cannot say this for 5 years. I do not know if anyone else can answer this. If you find someone, let me know.
7. What is your view on emerging markets, in general, and on India, in particular?
I am looking at emerging market exchange-traded funds (ETF) in new York and I can see a positive long term momentum and positive long term breakout.
8. Lastly, if you could give some key advice for aspiring traders out there, what would it be?
That is a very big question. We spent a lot of time to learn techniques, methods, systems, and relationships but we spent very little time to learn about emotions. You must give time to learn about emotions. When you enter a trade, you should not think about how much money you can make, but you should be pondering more over your risk appetite, in case things go wrong. New traders or technical analysts need to focus on emotions and risk-reward ratio.