One of my Patreon supporters asked a really important question.
They were backtesting trading strategies, but were struggling to achieve a profitable win rate.
The win rate was not even going above the 50% mark, even with a 1-to-1 reward-to-risk ratio.
But when I analyzed the chart they were trading, I noticed it mostly looked like this.
It was a sideways movement that had a little bit of a trend in between.
But this was a EURO USD one-day timeframe chart.
If you have been watching the USD for the last year or two, you probably know that all these downward and upward swings were caused by major news events.
So, they were not getting a high win rate because the market movement was not in a good trend for the most part.
It was bad for a trend-trading strategy.
For comparison, this is what a long-term trending market looks like.
It only has a little bit of range or slow movement in between.
Since they were using a 9-period moving average to determine the trend, they wondered if that was not good enough to identify the good and bad markets.
I mean, if the candles are staying above the 9-period moving average, then it’s a good trend, right?
Well, not always.
The price can stay on one side of the moving average even in a range or a bad market.
As you can see on this ranging chart, since this is a wide range, the price is making big up-and-down swings.
Because of that, there are scenarios where the price looks like it is trending, especially on smaller timeframes, but it is part of a wider range movement.
In other words, this EURO USD chart is actually bad for a trend-trading strategy.
We even have tested data on the Trading Rush channel that says moving averages will show the wrong trend, and win rate will drop, if the higher timeframe is ranging or if there is a wide range going on, something like this.
But then, the Patreon supporter hit me with one of the best and most important conclusions.

They said that we can determine if the market is in a good or bad condition only in hindsight.
Furthermore, we can say this chart is bad and ranging because we can already see it was bad and ranging.
It doesn’t tell us if the market will also stay in a bad range in the future.
For example, if we had seen the chart when it was ranging like this, we wouldn’t have known it was going to continue to move in a range like this.
And on this chart, since the price was moving in a really nice uptrend, it doesn’t mean the price will also be in an uptrend one year from now.
The technical analysis we do, the trend analysis and everything else, is mumbo-jumbo nonsense because it doesn’t tell us the future.
And guess what? They are absolutely right.
If anyone told you they know what the price is going to do in the future with a guarantee, then run in the opposite direction.
Because no one and their dog can predict the future.
No indicator can tell what the price is going to do in the future because that’s complete nonsense.
But we all realize it at some point in our trading journey.
But does that mean we shouldn’t use technical analysis to take trades?
If technical analysis or anything else doesn’t have the ability to predict future price movement, why should we care what the price movement is doing right now or was doing in the past?
Past movement doesn’t impact future movement, right?
But let me tell you what a thousand-year-old monk told me in the Himalayan mountains: it doesn’t matter.
Technical Analysis is not about predicting future movement, I mean it is, but it is also more about analyzing the current movement to find the best price structure and hoping the price will continue to be good in the future as well.

If the price is moving in an uptrend really nicely right now, and has been for the past 10 years, technical analysis is about finding and analyzing that movement and then hoping it will continue to do that for a little while longer so we can take trades in that trend direction.

The probability of continuing in the trend direction is not 100%, but more than 50% of the time.
We all know no one is right 100% of the time, but that just-above-50% probability of a trend continuing is what makes money for trend traders.
We literally have data on the Trading Rush channel that says the price has a higher probability of moving in the trend direction.
But what about the hindsight I mentioned near the start of the video?
I told you this EURO USD chart is in a range and showing bad movement, and that’s why the win rate was low.
But you see, on the Trading Rush Discord server, I have a section where I put Forex pairs in the sideways and slow movement categories.
The thing is, a while back, when the EURO USD daily timeframe was moving like this, I had put it in the slow market movement category as well.
But when the price started to react strongly to news events and I saw strong downward pressure, I removed it from the slow market, thinking this chart is mostly reacting to news events now.
And it can continue to make strong trend like moves if there are more stronger news events.
When it started to reverse and move strongly in the upward direction, I still thought it was because of all the news events, because I was tracking news events that were driving the USD price movement.
But now, when I analyzed it for my Patreon supporter, I mainly saw it as a range market first.
I am not saying this movement was good for trading because it was all random news reactions that don’t care about technical analysis, but you can see how hindsight has affected my view on this chart.
Previously, the range market had ended for me when the price started moving strongly in the downward direction.

And if I had not been watching USD-related news events, I would have thought about taking short trades in this strong downward momentum, thinking it would be the start of a new downtrend.
But now that the price has moved up again and the overall price movement looks sideways, my instant view on the market when I saw the chart was that it is still ranging.
In other words, hindsight affected my view!
So, my Patreon supporter is right: we can only identify good trends and bad trends in hindsight.
Actually, I wouldn’t say “only,” because in my nine years of trading, I have avoided bad markets and found what has a higher probability of making money by analyzing what was moving the price in the live market.

Furthermore, I was only able to make profits in front of a live audience in the long run, and I was only able to make the highest profit of my trading journey, because I managed to identify the bad and good things, in the live market without hindsight.
But it’s definitely true that identifying good and bad trends is much easier in hindsight than it is in the live market.
My biggest hindsight regret is not buying Nvidia stock in 1999 when it was only a few dollars.
I mean, look at it. I could have been a billionaire by now if I had bought it in 1999.
Instead, I am making stupid videos on YouTube.
You see, hindsight is a bench, and it will always be there making you feel bad about your decisions.
Unless we find someone who has a third eye and can see the future,
all we have is data about the price movement from the past.
And all we can do is use it to find patterns and make future decisions.
If data says the price has a higher probability of moving in the trend direction in the long run, then we will probably have a profitable win rate that will be slightly above break-even, and we will probably make money.
And still hindsight can make us look like an idiot.

I mean, look at the guy who sold Nvidia at this point; imagine how he must have felt after seeing this strong move in the upward direction.
He was such an idiot in hindsight.
That’s all!