Handling Information Overkill

Hey, guys!

I thought I might start this thread in order to gain some external views on a problem I have recently been having. As to myself: I have first met our dearest of friends Forex back in 2012, when I casually played the markets for a bit. I never took to it seriously then, so I soon turned to more pressing issues in life and forgot about it all. A few months ago I came back, this time for real. I think I have piled up some substantial knowledge by now and I have had some success in demo.
Now, as to my problem: the more I learn about different approaches to the market, the more I find myself looking at any given situation from more than one perspective. For example: the first approach I learned was the standard reversal at support/resistance. I then encountered trend-following strategies, like the Ross Hook. Now, any bounce off a key level (during a trend) might as well be viewed as a Ross Hook setup, but the direction of the trade I would take would depend on which tactic is applied.
This is just one example of a situation in which I am more confused by my knowledge of things than I am ensured. How do you handle this? Do you just stick to one approach and ignore other things you might know about?


Yes, pretty much.

I have 3 levels of information to confirm a trade-

  • must have
  • would like to have
  • sense check

The must-have stuff is the set-up to identify a suitable instrument and direction, and entry signal to get me in at the right time.

The would-like-to-have information is a range of chart data that helps with conviction. It could be used for position sizing, it could be useful to grade instruments if you only want 1 trade and 3 charts are competing for your money, it can also influence how hard I want to hold on once I’m in.

The sense-check is e.g. if I want to go short on a USD-based pair and the rest of the world is buying USD, why the heck do I think I’m so clever?

Maybe everybody uses some such sort of hierarchy, formally or otherwise, but I promise I use it rigidly. Also, I rigidly ignore everything else in the world - so,

  • trend channels
  • RSI, MACD, stochastics, VIX etc.
  • tipsters
  • everything in all newspapers and on TV
  • central bank chairman statements
  • all daily forex analysis on here / elsewhere

Everything you see has an effect - if you don’t want it to have an effect, don’t even look at it.

Hi Codaky,

I suspect the problem is that quite a lot of it is actually [B][U]mis[/U][/B]information.

In two main ways …

First, by sticking for the most part to authoritative, reliable, accredited, peer-reviewed information that has stood the test of time, from mainstream, orthodox textbooks published by mainstream, orthodox publishers, and ignoring most internet “information” which anyone can “publish” without any of the above criteria applying to it (and they do, quite often for marketing/promotional purposes of their own);

Secondly, by bearing in mind always that in a field of activity with a (let’s say) 95% failure-rate, most of the “information” one encounters, and especially the “consensuses of opinion”, are [I][U]likely[/U][/I] to be pretty misguided.

Quite a bit, yes.

I was particularly interested that you mentioned Ross Hooks as an example, because those are actually the underlying basis of [I][U]most[/U][/I] of the trading methods I use, and have used for years, quite successfully. But all my information about them comes directly from Joe Ross’s textbooks (without which I probably wouldn’t be making a living at all). I’ve “made them my own”, to some extent, by making them suit my trading style, adapting them a little over the years and adding in some things from other sources, too, but those “other sources” are also mostly textbooks of the same kind of authority, status and longevity as the Joe Ross books. :slight_smile:

Hi Codaky

I was in a similar position sometime around the beginning of 2015. I’d accumulated a good bit of knowledge and ideas around the reversal at support/resistance approach. Different people’s way of identifying levels, price behaviour around levels, trend or counter-trend, entry systems, the impact of fundamentals, trade management strategies etc etc. This was combined with an embarrassingly long time on demo studying charts and trying to pull everything together. It was coming but your phrase ‘information overkill’ summed up my problem too.

The best thing I ever did in relation to my progress in this game was to get rid of all distractions. I avoided forums and trading-related social media for about a year (some people may be able to ignore the distractions in places like this; I couldn’t) and didn’t read anything to do with trading whatsoever. I described it as ‘climbing into the bunker and pulling the lid down’. just me, the charts and a blank pad of paper. It felt quite liberating to be honest.

It was then a case of simplifying everything. What’s the basic concept behind it all? What tools do I have that reinforce it? How can they fit together to form a unified approach? What doesn’t fit or intuitively doesn’t feel right? OK discard that. How can this be kept as simple as possible at every stage. Create the rules that cover entry and all aspects of trade management. Right, now test it. Focus 100% on the process. Adapt to new scenarios that play out. Refine. Constantly refine.

That process of refinement is still happening now I’m running a live account. As far as forums etc go, the distractions just go whizzing over my head these days. Before, when I saw a new system or tool that looked interesting, I’d think ‘ah that could work I’ll go play with it’. Cue another load of wasted hours or something else to add to the overkill. Now I just don’t take any notice. I have my own way of playing this game based on the information I’ve absorbed down the years - much like you I guess.

Not sure any of this will help, but good luck and I’m sure you’ll find your own way through the problem.

Try take as much information out of your decisions… A lot of information will not benefit your trading.

Too Much Information: Effects of Complexity on Decision-Making

Thank you all for your input. I feel that what I am intending to do (actively select one kind of approach and ignore adverse information) aligns with what you are advising.

Lexys, thank you again for your - as always - elaborate response. I find your remarks especially interesting because when I joined this forum, I have quickly stumbled upon your advise about limiting sources to somewhat accredited authors. I followed through with that, so let me ask you: Regarding my example (and since I now know that you yourself know both books), when I take both Nekritin and Ross, with the former I would take a long position at support, whereas with the latter I would expect price to re-visit the level for a short position. How do you decide which is the way to go?

I don’t know whether there’s a right answer to this. Overall, I prefer Ross to Nekritin, but I err on the side of “wait and see”, personally, preferring in general to enter late with smaller profits and a higher success-rate. But that’s just my perspective … :8:

A strategy that works all the time for every given situation doesn’t exist, the whole idea of having a strategy is to come out on top overall in the long run hence the idea of an edge, positive expectation etc.

Taking a different entry from another strategy you are aware of may have worked out better for you this time but how would it affect your overall results if you mixed various strategies in the long run, how would you decide when to use which type of entry and wouldn’t they eventually become sub-strategies with metrics of their own? Would the extra work or meddling justify the ‘gain’?

Where your increased knowledge does come in handy though is in the cases where price reacts to a factor you are aware of from another strategy allowing you to take extra profit from a trade or reduce your exposure (happens maybe 20-25% of the time). Again, with increased knowledge you perhaps see the trade playing out 3 or 4 different different ways prior to getting into the trade when a potential setup is on the horizon, in extreme cases you may not take the trade at all (happens perhaps 15% of the time, probably less).

It takes a lot of work to keep things simple. A good sort process gets rid of a lot of info that doesn’t need to be part of your decision making process very early on. Any fool can make things complicated :smiley: