Many newbie traders associate information overload with the ability to outsmart others.

However, having all the bells and whistles on your chart can actually harm your trading strategy.

Likewise, thinking too much about a situation, staring too much at a chart, and of course trading too much willpower will likely have the same effect.

Whether you’re a seasoned investor or you’re still learning the ropes, you’ve probably established that trading is not. However, the process itself should not be complicated, but rather simple and effective.

So, let’s simplify things, shall we?

Step 1: Time to get all that clutter out of your charts

We understand: you want to be ahead. You want the odds in your favor.

The thing is, you don’t need a complicated approach. You should use what works for you.

Technical analysis

Technical analysis

In financial trading, technical analysis refers to the method of studying the history and price movements of an instrument, such as currencies, stocks, commodities, etc. The main determinants include the historical price movement of an asset, chart patterns, volume and other mathematical visual based tools, in order to predict the future movements of this instrument. Traders who use various means of technical analysis are known by various terms, such as technical traders, technical analysts or technicians. At the heart of technical analysis is the notion that the past performance of a financial asset is potential evidence of future activity. Unlike fundamental analysis, technical analysis is not interested in the causes of price fluctuations; he deals only with its effects. Therefore, technical traders diligently observe the historical charts of the instrument they wish to trade. By applying a number of techniques, technical analysis ultimately predicts how prices will act, sometimes also time-dependent. There are a host of visual tools available to the technical trader, with the most popular of these being included in all major brokerage platforms today. Understanding Technical Analysis Technical analysis itself consists of a number of different methods, which generally fall into two main categories – leading indicators or lagging indicators. Leading indicators refer to charting tools that allow the trader to predict the movement of an asset before it actually happens. These advanced techniques include Fibonacci, pivot points, trendlines, divergence and harmonic trading, and are popular with traders who prefer to trade reversals. Lagging indicators are those visual tools that allow a trader to take advantage of a strong trend, by entering it while it is forming; these tools include the MACD, the Awesome Oscillator and moving averages. Technical traders don’t all use the same tools of course, and even a trader who uses a particular indicator. For example, the Stochastic Oscillator will likely use it in a different way than another trader using the same indicator or set of indicators, which makes technical analysis extremely subjective. That said, technical trading has merit, and as unintuitive as it may seem, previous price patterns show up time and time again. As an increasing number of traders search for specific market points, the likelihood that these points will matter also increases.

In financial trading, technical analysis refers to the method of studying the history and price movements of an instrument, such as currencies, stocks, commodities, etc. The main determinants include the historical price movement of an asset, chart patterns, volume and other mathematical visual based tools, in order to predict the future movements of this instrument. Traders who use various means of technical analysis are known by various terms, such as technical traders, technical analysts or technicians. At the heart of technical analysis is the notion that the past performance of a financial asset is potential evidence of future activity. Unlike fundamental analysis, technical analysis is not interested in the causes of price fluctuations; he deals only with its effects. Therefore, technical traders diligently observe the historical charts of the instrument they wish to trade. By applying a number of techniques, technical analysis ultimately predicts how prices will act, sometimes also time-dependent. There are a host of visual tools available to the technical trader, with the most popular of these being included in all major brokerage platforms today. Understanding Technical Analysis Technical analysis itself consists of a number of different methods, which generally fall into two main categories – leading indicators or lagging indicators. Leading indicators refer to charting tools that allow the trader to predict the movement of an asset before it actually happens. These advanced techniques include Fibonacci, pivot points, trendlines, divergence and harmonic trading, and are popular with traders who prefer to trade reversals. Lagging indicators are those visual tools that allow a trader to take advantage of a strong trend, by entering it while it is forming; these tools include the MACD, the Awesome Oscillator and moving averages. Technical traders don’t all use the same tools of course, and even a trader who uses a particular indicator. For example, the Stochastic Oscillator will likely use it in a different way than another trader using the same indicator or set of indicators, which makes technical analysis extremely subjective. That said, technical trading has merit, and as unintuitive as it may seem, previous price patterns show up time and time again. As an increasing number of traders search for specific market points, the likelihood that these points will matter also increases.
Read this term products and tools will make you believe that the more elements a trader uses, the better his market appreciation and performance will be.

This couldn’t be further from the truth and can be detrimental to your wallet.

However, adding too many charting tools, oscillators and indicators can make your charts look cool, but you will almost never get some kind of secret insight from them, especially if you are going to find something that others people might not know.

There are many traders, old and new, who have failed to realize that indicators can often prove to be contradictory in the way they work.

You need synergy and your indicators complement each other, not the other way around, because if you don’t, you will only make your charts chaotic and most likely worsen your decision-making processes.

If you are constantly faced with conflicting signals and unable to filter out bad signals, you will simply never have simply aligned, identified a correct trading signal and obtained a clear opportunity to trade.

Finding the right indicators is only possible through proper testing.

Step 2: Don’t Complicate Things

Drawing your support and resistance levels on your chart is an essential skill and can make or break any trading strategy.

Surprisingly, there are still too many traders messing up their support and resistance.

The price charts will have many data points to choose from, which in turn will make it possible to approach them and find levels with different methods.

To avoid mishaps and getting lost in your own analysis, consider aiming for three things:

1. Keep it simple

2. Keep things logical

3. Maintain Clarity

Remember that adding unimportant levels can and will ruin a clean analysis, as you will only make reading the graphs much more difficult for yourself.

Step #3: Reduce the noise

You have gone through the clutter. You kept it simple.

It might be time to consider using longer timeframes.

It’s not that shorter timelines aren’t effective; it is a question of filtering the “noise”.

Setting yourself a longer timeframe will give you a clearer picture of what is really happening in the market, as you will dispel the erratic market noise that frequently occurs on shorter timeframes.

The 4-hour and daily charts give way to many trading opportunities that require much less mental energy, making the way you spend your time much more efficient and effective.

Remember that trading is a marathon, not a sprint.

You aim to win consistently, day in and day out, so don’t start writing checks that your body and mind can’t pay in the future.

By setting yourself a longer timeframe, you are guaranteed to become a more objective trader, as you won’t over-analyze the market and spend time trying to find signals on each timeframe.

Sure, you might miss some opportunities, but you’ll save your energy, which is most important when thinking long term.

This brings us to the last step.

Step #4: Don’t try to force things

High frequency trading does not correlate with making money.

As such, you should recognize that time away from your trading screens actually counts as a very valuable part of your trading routine and overall plan.

Therefore, you will want to develop a trading routine and learn to stick to it.

Check the markets daily a certain number of times and at the close. Execute everything in your trading plan and if you find that no trading opportunities have presented themselves throughout the day, there is absolutely nothing wrong with walking away.

The market will still be there tomorrow.

Sitting in front of your screen for hours while trying to force a trade setup can end badly.

Wrap

As Jules Verne wrote in his novel Around the world in 80 days: “A minimum well used is enough for everything.”

Sometimes less is more and there will be times when doing less will be the most profitable course of action.

It’s no surprise that successful traders spend a lot of their time studying the markets and waiting for the perfect opportunity to line up, instead of trading non-stop.

Strategy. Design. Implementation. Keep it simple and you’ll be on your way to success.

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