Why you Should not be Looking at Charts 24/7
Trading is an interesting profession. I don’t think I know of any other skillset that requires so much mental focus and strength. Now being successful in any endeavor requires you to put in similar amounts of time and effort. But trading is different in a couple different ways. The most important being your mindset and psychology.
The single most important thing that will determine your trading success is your psychology and your ability to manage your emotions. You will just not succeed unless you are able to numb yourself to what is happening in the markets.
I wrote this blog post to help you new traders or even seasoned traders see why it is not a great idea to be on your charts all waking hours of the day. It is important for your mind to take breaks. If you have your consistent focus on one thing 24/7 you are prone to burn out. Your mind needs breaks in order to bring clarity and order.
When you take breaks, you give your mind a mental break and this gives it room and space to open up for new ideas. Order flows into your mind when you release what you are focusing on just for a moment and bring your attention to something else. Its almost like you forget what you were working on and bring your focus elsewhere. Being in the present moment. This is powerful because it opens your mind up to new ideas.
Have you ever found that thinking so hard about something actually stifles your ability to think clearly at all? Take for instance trying to write a research report. When you think so hard about what you should write your mind comes up with no ideas. But when you are out for a walk not even thinking about the report you get a million great ideas to begin writing about! The same phenomenon can be applied to trading and mainly when you are analyzing charts which brings me to my main point of discussion for today.
Over Analysis
Over-analyzing charts is one way to sabotage your trading success. Over-analysis most commonly occurs when traders do their initial analysis but then they go back and “review” what they have seen on the charts. By looking at the charts over and over again they begin to see and imagine patterns and price action that is against what their initial analysis pointed to. They then develop doubt in their mind about what they initially saw on the charts.
I like to call this analysis paralysis. Maybe you have heard of this term. It is very real in the trading world and stumps a lot of traders. The trader gets so many conflicting ideas about what the chart is telling them that they literally cannot develop a bullish or bearish bias on the pair.
How does this happen? It happens when a trader looks at a chart but does not exactly know what they are looking for. They don’t know how to dissect the chart and break it down into a story that the price action is telling them. Instead, they look at various indicators, support and resistance and possibly trendlines or other technical tools and find that they all point in different directions. Indeed, this can be very confusing for a new trader and a seasoned trader!
What I have found to help me not overanalyze the charts is having a crystal clear strategy so that I know exactly how I analyze charts and what types of setups I will be looking for. Then once I know exactly what I’m looking for I glance at a chart quickly to see if there is a possible setup. I don’t look at the chart for to long because this is when over-analysis can kick in… when you stare at the chart for to long!
You may know what I’m talking about when I say your mind starts to develop patterns in the price action that you just didn’t see a few seconds ago! What I always like to say and implement into my trading is that if you look at a chart and do not see a possible trade within 30 seconds of looking at the chart then there probably is no setup.
Why? Because clear setups do not have to be dissected. They are so obvious that they just jump right out at you! Of course, you must dig further to see if the setup meets all of your trading plans criteria but at the initial first glance, you should be able to see if there is a valid trade on the chart.
I have implemented this strategy into my trading routine and found it to help immensely with over-trading and emotional trading. I do not get emotional when trying to find a setup by making up possible price scenarios in my head.
By spending a little less time actually finding trades on the charts I am able to get back to the real reason I started trading in the first place. That is for freedom! I now have more time to analyze, backtest and review my strategy. Which are all vital components to trading success and growth. Not being on the charts 24/7 allows you to cleanse your mind and come to the charts on the next trading session with a focused and clarified mindset. This is absolutely essential. So rather than analyzing possible setups 24/7 why not go out and enjoy some time with your family? Remember the reason you began trading in the first place! I guarantee you that by taking the time away from the charts between your trading sessions you will come to the charts when you are supposed to be trading with a clear and focused mindset!
At DARA trade we actually have a tool to help you NOT have to look at charts 24/7. When the perfect setups present themselves according to predetermined criteria you get an alert on that particular currency pair! DARA notifies you once your rules are met and ensures that you are only taking the highest-quality setups!