The Feynman Method in Trading: How to Check if You Really Understand a Trading Tool

Step 1. Pick a topic and write down what you know

Pick one area of trading you want to master. It can be:

• RSI

• Moving averages

• Inside Bar pattern

• A risk management rule

But be specific: instead of “technical analysis”, for example, write something like “support and resistance levels”. Then write everything you recall: what it is, how it works and when to use it. Don’t worry about mistakes, just unload what’s in your head.

Why it works: This instantly exposes gaps. You’ll see the difference between knowing the name and understanding the principle.

Do it now:

•  Choose one tool

• Write down everything you know

Step 2. Explain it in simple words

Now imagine explaining the tool to a friend who just opened a demo account. Use plain language without trading jargon or complex formulas. For example: “A stop-loss is like a safety net: it closes your trade automatically if the price goes the wrong way, so you don’t lose too much money.”

Why it works: Simplicity proves understanding: if you can’t explain it clearly, you don’t understand it yourself. When you explain a topic to someone (even yourself), you face gaps in your knowledge, and, therefore, can fill them (see next step). And if you can explain something, it boosts your confidence.

Do it now:

• Use plain words
• Create one simple analogy

• Keep it short

Step 3. Find the gaps and go back to sources

While writing, you’ll stumble: “Why does a moving average lag?” or “What does ‘overbought’ really mean?” Don't fret, just go back: read the handbook, check chart examples or review notes, and refine your explanation with clear answers.

Why it works: any learning process requires retrying. This is how you build your knowledge. In the end, every “I don’t know” becomes a “now I know.” It’s about how to stop trading blindly and start seeing what tools actually measure.

Do it now:

• Mark spots where you got stuck

• Revisit a handbook, chart, or video to fill in the blanks
• Write down the corrected explanation

Step 4. Organize, add real examples and create analogies

At this point your notes might seem messy. It’s time to rewrite them into a clean, structured explanation and add a market example: “When EURUSD touches the trendline and RSI is below 30, the market is overloaded with sellers and may bounce.” Don’t forget to create analogies, such as: “The RSI is like a market thermometer which shows when a price is overheated up or down.” 

Why it works: Order in words = order in thinking. You are transforming knowledge into a usable trading algorithm with the help of real-world examples and analogies which are much easier to remember and explain.

Do it now:

• Rewrite your notes into a structured form

• Add one chart or market example
• Create your own analogy

Step 5. Test yourself

Finish by stress-testing your knowledge:

• Backtest on historical data

• Open a demo trade

• Explain your strategy to another trader or even out loud to yourself

Why it works: Self-testing kills the illusion of knowing. Challenge every tool rather than trusting it blindly.

Do it now:

• Can I explain this to a beginner?
• Can I show a real chart example?
• Do I know when it does not work?
• Can I state one clear limitation?

Checklist: stress-test any indicator in 15 minutes

Here’s a quick checklist you can save and use whenever you want to test yourself:

1. Pick one tool (RSI, MA, trendline).

2. Write a simple one-line explanation.

3. Open a real chart (EURUSD, XAUUSD, S&P500).

4. Check where it works and where it breaks.

5. Ask yourself: what did I understand, where was I wrong, and how will I use this next time?

Trading is not about memorizing names like MACD or Fibonacci retracement. Real skill is knowing what a tool measures, when it works, and when it fails. Download the one-page checklist below and test any indicator in 15 minutes.