It's all in the charts. So says the day trading system you bought yesterday. And the day trading course you bought last week. And the day trading books you've read over the last year. If you buy the bottom of the candlestick and sell the double top while placing your stop one standard deviation from the mean and shoot for a profit of three times your risk, riches will come to you. Great prosperity awaits.

If riches do not fall into your lap, it's because you didn't read the charts right. That wasn't a real double top. That was a false breakout which became a pennant which became a flag and then turned into a talking duck. Here's a tip: Save yourself some money and don't buy anything else which talks about technical analysis. It's killed more traders than mortgage-backed securities.

Mechanical day trading systems simply do not work in the long run. If you've found one that works in the short run, consider yourself lucky, take your money off the table and use it for a vacation...because eventually the system will blow up. There is a simple explanation for why this is so.

Neither Greenspan nor Bernanke has ever moved a market. No economic report about CPI or PPI or unemployment has never moved a market. Computers have been known to move markets but I'm pretty sure it was only when they were turned on by a person. HUMANS move markets. Humans who trade. Humans who buy and sell. Not exactly an earth shattering epiphany but you would be surprised at how many traders never seem to grasp this concept. Humans with access to large amounts of money move markets. Guys at banks and hedge funds. Traders who swing 5,000 contracts at a clip. You won't ever move the market. Neither will I. But if you and I and a bunch of other small traders all panic at once, we might move it temporarily.

A trading chart shows you what happened in the past. It cannot tell you what's going to happen in the future and it also cannot tell you what's happening right now. Levels and trenlines only hold if a very large amount of money steps up to play at those spots and a chart definitely cannot tell you how much money is being put into action. This is why one should stay away from charts.

If a technical analysis setup works, it doesn't work because it's a technical analysis setup. It works because there was more money interested in going that direction at that point in time. When new money enters the market and scared money exits the market at the same time, sharp moves occur. This is the key to understanding how to capitalize on momentum.

I know more than one professional day trader. Guys who have made a lot of money. Seven figure money. They all concentrate on reading the order book. Reading the price action. The information in the bids and offers. If they use technical analysis at all, it's role is very minimal and they will all tell you that normally it's more of a hindrance than a help. They spend their time watching the market depth trader or DOM.

If you want to make money day trading, you have to learn how to anticipate what the big players are going to do next. You have to learn how to read the price action in the order book. You have to learn how to decipher the information in the bids and offers. The biggest traders in the world trade on this information. So should you.