Knowledge Quiz
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Test your knowledge of the Universal Truths synthesized from 14+ technical analysis books.
Volume Confirms Everything
Volume is the lie detector of the market. Price movements without volume confirmation are suspect.
High volume on breakouts confirms institutional participation. Low volume rallies often fail.
Source: Ed Downs, Stan Weinstein
Consolidation Precedes Expansion
Energy builds during consolidation and releases during expansion. The longer the base, the higher the space.
Tight consolidations with declining volume often precede powerful breakouts.
Source: Ed Downs, John Connors
Failed Moves Are Powerful Signals
When price fails to follow through on a breakout or breakdown, trapped traders create fuel for reversal.
Failed breakouts often lead to sharp moves in the opposite direction.
Source: Adam Grimes
Context Determines Meaning
The same pattern has different implications depending on the stage and market context.
Stage > Pattern > Candle > Indicator. Always analyze in proper sequence.
Source: Stan Weinstein, Adam Grimes
Fear > Greed
Stocks fall faster than they rise because fear is a stronger emotion than hope.
Downtrends are typically steeper and faster than uptrends.
Source: Ed Downs
The 4-Stage Framework is Universal
All stocks cycle through Basing → Advancing → Topping → Declining stages.
Only buy in Stage 2. Never buy in Stage 4. Stage 1 and 3 are watch zones.
Source: Stan Weinstein
Structure > Pattern > Candle > Indicator
Proper analysis follows a hierarchy from macro to micro.
Start with market structure, then patterns, then candles, then indicators.
Source: Adam Grimes, Trading Mentors
Day Trading is Advanced, Not Beginner
Shorter timeframes require more skill, faster decisions, and better risk management.
Start with swing trading on weekly charts before attempting day trading.
Source: Trading Mentors
The 3 Watch List System
Organize stocks into NTZ (Not Trade Zone), TTZ (Transition Trade Zone), and ITZ (In Trade Zone).
NTZ = avoid, TTZ = watch for entry, ITZ = active trading candidates.
Source: Trading Mentors
Discipline is an Outcome
Discipline comes from having an edge, a plan, and proper execution - not willpower alone.
Edge + Plan + Execution = Discipline. Build the system, discipline follows.
Source: Adam Grimes
Liquidity Moves Markets
Central bank policy and money flow are primary market drivers.
Follow the money. Liquidity trumps fundamentals in the short term.
Source: Stanley Druckenmiller
Hot/Cold Awareness
Know your current trading state. Bet bigger when hot, reduce size when cold.
Self-awareness about your trading state is critical for position sizing.
Source: Stanley Druckenmiller
The First Bounce/Dip is False
The first bounce in a bear market is usually a trap. The first dip in a bull market is usually a buying opportunity.
Wait for confirmation before acting on the first counter-trend move.
Source: Stanley Druckenmiller
Multiple Timeframe Confirmation
Check trend on 2+ higher timeframes before trading.
Higher timeframes trump lower timeframes. Daily 20%, Weekly 35%, Monthly 45%.
Source: Trading Mentors, John Murphy
Cut Losses, Cut Losses, Cut Losses
The universal rule of trading. Small losses are acceptable; large losses are fatal.
The biggest mistake is not cutting losses quickly enough.
Source: Every Master Trader