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Your feelings impose direct impact on the state of your account. You may have a brilliant trading system, but if you feel scared, irritated or upset, your account is very likely to suffer.

To win in any competition, something more that just muscular strength or strength of intellect is required. In order to be the best one, the psychology of a winner is needed. A lot of obstacles are encountered by everyone who aspires to success in trading: temptation, fear, exhilaration of quick profits and shock of a series of bargains with losses. Even the best trading strategy sometimes arouses losses as well. Nothing but non-fading desire to achieve your aim and strength of mind may lead to achievement of the highest trading skills.

Trading tactics are required to minimize risks of operations conducted. There are standard situations, showing the best possible ways of further development. Trading tactics allow not only minimizing risks, but maximizing profit as well.

Like reversal models, continuation models are formed during periods of unstable equilibrium in the market, which appears when forces of bulls and bears are approximately equal.

Thorn - Unlike other reversal models, which reflect gradual changes in a trend dynamics, the thorn is a sharp jerk of the price in some direction, immediately followed by a jerk in the opposite direction without any pause.

Many statements discussed in the pages, dedicated to the model “Head and Shoulders”, are applied to the rest models of the trend reversal. The model of “Triple Top or bottom” is encountered more rarely, than "Head and Shoulders", and is just a version of it. The main difference consists in the fact that all three peaks (or three falls) of a triple top or bottom respectively are located almost at the same level. In case if there are two peaks (or falls), they form a double top (or double bottom) respectively. Technical analysts often have different opinions regarding the type of a model formed: "Head and Shoulders" or “Triple top”, Triple Top or Double one. This argument is rather of academic character, because in the core both of the models are virtually the same.

Today we will study a most well-known trend reversal model called “Head and Shoulders”. During our previous lesson we discussed that existence of a previous trend is required for formation of every price model. The condition for formation of the “Head and Shoulders” model is ascending movement in a price graph, when every next rise and fall is higher than the previous one. Note that in Figure 1 the trend is even accelerated at a certain stage of the trend development, which is proved by a sharper inclination angle of the trend additional line. However, all good ends sooner or later, and we receive preliminary signals about the trend slowing down, when price pierces the trend lines, both additional and initial ones.

Analysts have noticed one more specific feature of price movement: any trend reversal does not occur in instantaneously, with a wave of a wand. Not at all! In most cases any trend slows down and stops at first. A pause occurs in the movement, the so called transition period, after which the trend continues or reverses

Fear and greediness, hope and euphoria rage in the market. And as price models reflect mass human psychology which remains unchanged with time, you will get a powerful tool for analysis and prediction of the situation future development in any mass financial market, if you apply them properly.