Every point on a price chart already happened. The line ends at today. Nothing on it is about tomorrow.
← From ZeroWhat it is Why we see shapes The coin chart The trap Where you use it In one lineNext · 6.2Why prices stop at the same line
Our brains hunt for shapes, even in noise. Show two chart readers the same line and they often name different patterns, or none at all.
Burton Malkiel made up a stock at $50. Each day a coin decided: heads, up 50 cents; tails, down 50 cents. A chart expert saw a strong signal in the result. It was a coin.
The danger is not that shapes never repeat. It is the feeling of being sure that a shape gives you. That feeling comes just as strongly from a coin.
Before your next chart, write one line: what would prove me wrong? Then you read the chart, not your hopes.
A chart remembers the past. Even a coin draws patterns, so write what would prove you wrong first.
Do it today
Before your next chart, write what would prove you wrong.
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