CIX FOUNDATIONS · LESSON 03 OF 04
Read the Market.
Separate what a chart shows from what you think might happen next.
Label the evidence
Start with the asset, venue, pair, timeframe and date. A daily candle and a five-minute candle summarise different periods. Data from different venues can differ. Write down what you are actually looking at before interpreting it.
A candle summarises the open, high, low and close for its interval. It does not show the full sequence of transactions within that interval. A still-open candle can continue to change.
Describe first
Try a sentence that another person can check: ‘In this window, the latest two visible peaks are lower than the previous peak.’ That is more precise than ‘this chart looks weak.’ Distinguish visible observations from your interpretation.
Look at the wider context as well as the local move. Mark the boundaries of a range or previous turning points, but treat them as areas of interest rather than barriers the price must obey. Keep the number of marks small enough that the chart remains readable.
Write two scenarios
For a hypothetical range, one scenario might be a sustained move beyond its upper boundary. Another might be a return into the range after a brief move outside. Write what you would need to observe for each scenario. Do not assign precise probabilities without a defensible method.
Separate the condition you are waiting for from the decision you would consider. Even a plausible scenario still needs a risk and execution plan. The chart alone cannot determine a suitable position size.
Your task: hide the future
- Choose a historical chart and hide the candles after a chosen date.
- Record the asset, source, timeframe and cut-off date.
- Write three observations that do not predict the future.
- Write two possible scenarios and the evidence that would distinguish them.
- Reveal the next section. Compare it with the original note without rewriting your earlier view.
Repeat with different examples, including cases that challenge your preferred interpretation. A few well-chosen winning examples do not demonstrate a reliable method.
Practise without an account at risk
The Read the Market demo offers another way to practise looking before guessing. Keep the same habit: write the reason for your choice and review it afterwards. A game score is not evidence of real-world trading performance.
Sources and context
Original CIX teaching exercises. Educational information, not personal investment advice. Examples are hypothetical; investing and trading can result in losses. Refer to the rules of the specific product and venue.