Does anyone else out there feel like sometimes they over-think trading? Like for example becoming aware of so many chart patterns, candlestick formations, indicators etc that they begin looking for and seeing things that aren’t even there?
For example over the last month, a time when many EUR pairs were trending nicely, I rode these trends quite well with just some EMA’s and an RSI and grew my account by around 5%.
Despite my 'success ’ I felt I should keep learning etc and reading articles and books. All of a sudden I was seeing reversals everywhere and thought there was some more pips to be made on the downturn. Since I started following this more ‘informed’ method I’ve lost my 5% profit and another 10% on top of it!
It would’ve been so much more profitable to look at the market in a simplistic way and with few indicators!
Good question indeed. Started trading forex a year ago and bit like you at the beginning was very simple to trade. What then happened was I figured better learn some more and my trading sky dived could not get a pip anywhere . At the end of the year though after studying this for a year have come to some conclusions on trading.
i can have all the charts up looking like Picasso masterpieces with indicators and clouds and lines and think wow that looks greAt , place a trade and then wonder what happened . Basically is all about me and my head that will make me money not the fancy charts take away my charts price will still be there. So rethought It through and simplifed my strategy and wow what a difference to me and my trading . So far so Good .
Now the big question is this if I did not embark on learning what I was doing would i still be trading probably not as at some stage I believe the market would have chewed me up . The difference now is I have built a trade plan and style that for now appears to be about to work consistently for me and have got rid off all the other things that where getting in the way of me possibly making some money at this .
In my opinion trading gets harder every time. The more traders there are in the markets the more fierce the competition.
Well, trading is (also) about projecting future price levels and to this end, given you are a discretionary trader, you should you fundamental as well as technical analysis. That’s what Anton Kreil says at the very least.
Just keep it simple! You don’t have to use all of the existing indicators, just pick the couple which you find the most reliable.
In general I think the question is about your trading strategy and your emotions. If you have a trading strategy with certain rules you just cannot let youself think that you’re smarter that the trading rules. Of course it can be hard enough from the very beginning but the practice will put everthing into perspective.
Good luck!
• Swing highs,
• Swing lows,
• Chart formations like head and shoulders.
• Support and resistance levels.
• I use 3 moving averages and a
• MACD
• That is it.
I trade breakouts of charting formations and support and resistance. So far this year im up 2500 pips. My charts are very simple and are updated once a day. This is my process and I just repeat every day.
What you have is called:
[B]ANALYSIS PARALYSIS [/B]
Too many indicators and to much stimulus and ideas jumping around in your head.
What is happening is your brain is trying to find a method to interact with the market but you have so many that you are just adding more noise to the market. Then your brain is also trying to reassure itself of a decision to buy or sell. But there is no information in your brain (experience) to say that this is the right thing to do. Then you hesitate. And go into flight or fight mode.
There are many methods out there to interact with the market. Find one you like and stick too it. Become a master and specialize in it. Preferable one that is easy for you to understand and see when your trading.
Then when you have one you then need to filter out bad trading habits that are unconciouss to you by becoming a mindful trader. For example: You might make impulse trades after a loss. You need to become concious of this habit so you can dodge the bullet. This is what i mean about filtering out bad trading habits.
Such a great post! People want trading to be flashy, exciting, and interesting, but if you are doing it right it should be rather boring.
Repetition is key. You use your strategy and stick to it. You don’t go out there gunslinging everyday looking to conquer. You should have a set plan ahead of time and the market dictates your course of action based on that plan. Once you find your edge… lather, rinse, repeat. That’s how I see thing anyway.
Can you expand a little? what MAs do you use? And for MACD do you use larger time frames? are you a day trader? how long is your average trade for?
sorry to bombard you… : )
Thank you!
I totally agree.
Sticking to a method and a process ables you to have consistency in trading. Using the same methods, indicators, trading at the same time, ect ect.
If you do this every day you will find out what are your flaws are. For instance your account maybe going down for a couple of months so you know you need to change something, or maybe your overtrading, making impulse trades ect ect. Or maybe your method is complete rubbish and you need a more sound proof method.
Moving averages: 20, 50, 100, 200 SMA.
MACD: Normal 12,26,9
Time Frames: Day, week, month. Sometimes 4 hour for entry but not that often.
Are you a day trader: No since i use end of day charts i only have to trade at most 30 minutes a day.
What i do each day is just update my charts. So there might be a formation or a resistance level that im looking for a break out so i just wake up each day and look at my charts to see if the breakout has accured.
People might think i actually trade resistance levels and charting formations. But that’s what it appears on the surface. I think in trading and in life you should understand your bottom line and work your way up. So my bottom line in what i trade is actualy [B]phsychology[/B]. I trade psychology, it just so happens to be that charting formations and resistance levels give me the best indication of what people are thinking about the market.
Why do i use those settings for my macd and moving averages. It is because most traders around the world are using them so when they are hit something happens. Because there are millions of traders look at the 200SMA that when it is touched something happens.
When i was day trading couple of years ago i was using daily piviot points. Same reason as above. If your a day and using a method not a system then you should use daily piviot points since there many traders using them too so when they are touched something happens.
So i just repeat the above process every day. This gives me consistency. And a way to interact with the market.