The Best Place to Learn About Technical Analysis
Stand on the shoulders of a technical analysis legend and market veteran.
Welcome back!!
Last week I released a very special podcast with technical analysis legend Alex Spiroglou.
In a world of 1-minute Tik Tok technical trading strategies, it was time to talk about how the pros use technical analysis.
And who better to do it than a multi-award-winning technical analyst and veteran trader.
These are my detailed notes from the session.
As always, take what works for you, and leave what doesn’t.
Happy Saturday!
Introduction to Trading and Technical Analysis
Alex and I began the discussion by highlighting a fundamental gap in his early trading journey: technical analysis provided the ‘when,’ but lacked the ‘why.’
He primarily uses technical analysis for timing and execution, leveraging daily charts for triggers/signals, and combines this with a setup (e.g., commitment of traders report, seasonals, business cycle or sentiment) which creates the context for a move.
Starting with Self-Awareness in Trader Development
Alex advocates beginning trader development with a focus on self-awareness, which is the foundation of his SMART Trader System. The acronym SMART represents the five stages of trader development:
Self-awareness
Market knowledge
Analysis and Planning
Review and Simulation
Trading Execution
Self-awareness involves evaluating:
Goals: Professional, part-time, or for fun.
Reality Check: Assessing financial, time, educational, and emotional capital.
Obstacles: Typically mindset-related.
Willingness to Commit: Determining true motivation and urgency.
Alex’s Path into Financial Markets
Alex's passion for trading began in his teenage years, inspired by his father’s experience in a bank dealing room. He pursued a degree in banking and finance at City University, where he was introduced to technical analysis by Professor Roy Bachelor.
While academia largely dismissed technical analysis at the time, his professor cleverly disguised it as a forecasting course. This experience solidified Alex’s focus on technical analysis as a career.
Importance of a Business Plan for Trading
Like many successful traders that I’ve met, Alex equates successful trading to running a business, emphasizing the need for a clear plan that includes:
Financial and time investment.
Educational and emotional preparedness.
Capital acquisition strategies, including prop firms and funding options.
Navigating Market Phases: Early Success and Learning from Losses
Alex started trading during a strong bull market (1998), which initially led to some easy wins and made trading seem not that difficult!
However, the inevitable downturn forced him to recognize the need for systematic learning. He experimented with numerous techniques and quickly learned to distinguish between useful and ineffective methods. This led him to prioritize:
Data-driven decision-making over subjective approaches.
Technical analysis for timing and fundamentals for understanding ‘why’ a move occurs.
Fundamental Data as a Key to Trading Decisions
Alex categorizes macro data into four essential components:
Business Cycle Data: Economic indicators and intermarket relationships.
Commitment of Traders (CoT) Report: Commercial, fund, and retail trader positioning.
Seasonality: Historical business cycles affecting price patterns.
Market Sentiment: Data reflecting investor positioning and outlook.
Combining Fundamentals with Technicals
Seasonality and CoT data serve as setups, not signals.
Alex has created a four-part trading framework to identify and capitalise on trades incorporating both fundamentals and technicals:
Setup: Identifies potential trade opportunities.
Signal: Derived solely from technicals.
Stop: Risk management measures.
Size: Adjusted based on conviction.
Key Technical Analysis Components: The Core Four
Alex’s approach to technical analysis is structured around four key components:
Trend: Eight-stage trend classification system (long, medium, short term).
Momentum: Speed of price movement using his MacDV indicator.
Volatility: Measured via his Volatility Valuation Index, inspired by John Bollinger’s work.
Relative Strength: Comparison of asset performance to prioritize trades.
Avoiding Common Pitfalls in Technical Analysis
He advised against overly subjective tools such as:
Trendlines and Elliott Waves (unless systematized like Tom Demark’s approach).
Candlestick patterns as standalone signals.
Fibonacci retracements, which he finds unreliable.
Again, he caveated this as they “didn’t work for him”, not that they don’t work.
If you are to use them, they should be systematise so that they can be properly backtested.
Scaling into Positions and Trade Management
Alex does not scale into positions.
Instead, he:
Uses fixed entries and exits.
Avoids adding to trades.
Adjusts initial position size based on trade ranking (A-D trades).
The Importance of Discipline and Risk Management
Alex advised 3 key strategies to help traders build discipline:
Rules-based trading: Clearly defined plans for every scenario.
Repetition and gradual desensitization: Exposure reduces emotional reactions.
Small position sizing: Reduces emotional burden and allows for longevity.
Learning from Trading Legends
Through professional associations and friendships, Alex has learned invaluable insights from industry giants:
John Bollinger: Volatility and indicator-based analysis.
Larry Williams: Systematic approaches to market timing.
Tom Demark: Rule-based technical setups.
Linda Raschke and Martin Pring: Intermarket analysis and strategy development.
Hope you enjoyed this newsletter, see you next week!
(This newsletter is not investment advice, all views are my own.)