How To Avoid Analysis Paralysis In Your Trading
In this video:
00:17 – Video and Podcast #195
00:27 – Analysis Paralysis affects so many traders – Information Overload
01:14 – Forums are mostly the blind leading the blind
01:25 – How do you avoid Analysis Paralysis?
02:00 – I love flying a helicopter and Karate – need to make your own decisions
03:21 – Personally I prefer to trade the longer time frame charts
04:14 – Having the confidence in the strategy to take the trade
04:58 – You need a simplistic approach to trading
05:30 – Get my #1 trading strategy for free – click on the link below
How can you avoid analysis paralysis in your trading? Let's talk about that and more right now.
Video and Podcast #195
Hi, Forex Traders, Andrew Mitchem here, The Forex Trading Coach, and this is video and podcast #195.
Analysis Paralysis affects so many traders – Information Overload
In today's video and podcast I'm going to be talking about analysis paralysis. It's a big problem that affects so many Forex traders, and it doesn't really matter whether you're new or more experienced, it just affects people across the whole spectrum of Forex Trading.
The problem is there is so much information out there regarding trading. The Forex market is so big. You get things like this. You get cell phones, you can't get away from market analysis, Twitter feeds, CNBC with lines scrolling everywhere, latest updates, news announcements. There's experts giving their opinion. You get fundamental opinions. You get economists. You get technical opinions, or lines, and charts, and graphs in different time frames. It goes on, and on, and on and people get extremely confused.
Forums are mostly the blind leading the blind
You then get the problem when you get the vast majority of forum sites with people with different opinions and different techniques all giving different opinions at the same time. Again, it becomes complete information overload. It's a big, big problem.
How do you avoid Analysis Paralysis?
How do you avoid that? Well, firstly, you need to become your own independent trader. You need to be able to think for yourself and make a decision for yourself, because it's a thing that I believe that in society in general we're becoming worse and worse at that. People have no ability to be able to make their own decision or do what they think. It's like we have that herd mentality where we feel in society in order to fit in we have to do what everybody else does, and we have to sort of copy other people.
I love flying a helicopter and Karate – need to make your own decisions
In trading that's not always a good thing. You see, outside of trading two of the things I love are flying a helicopter and karate, and in both of those you have to be able to make your own decisions, your own informed decisions, think quickly, react, and back yourself, really. You need a lot of training, and knowledge, and education to get to that level, of course you do, but once you have that training, and knowledge, and education you've got to keep refining it, you have to keep practicing it, but you also have to have that spontaneous back yourself, make that instant decision when things either don't go wrong, or things go unexpected. You have to have that ability to see something and make a call, a judgment call on that right now.
Trading really is not a lot different. The way I like to trade is I like to see a trade, take a trade. You see, the market's either going to go up, it's going to go down, or it's going to go sideways. It's not going to do anything else, really, when you bring it down to the absolute basics. The problem is when you start taking on different news feeds, different opinions, you do get that analysis paralysis. It's just information overwhelm, and you don't know what to do. People will get stuck because they'll go, “On a daily chart, Andrew, the Australian U.S. dollar's going up, but on a four-hour chart it's going down, and on a 15-minute chart it's going up, and on a 5-minute chart it's going down. What do I do?” Yeah, people get confused.
Personally I prefer to trade the longer time frame charts
The way that I like to trade personally is I much prefer the longer time-frame charts. That's not to say the shorter time-frame charts don't work with my strategy. They work extremely well. In fact, last night I was holding a webinar and some people trading 15-minute charts had made 14% in the last two weeks, but personally for me I know what works for me the best and it fits in with everything else that I do. The longer time-frame charts with candle patterns, candle shapes, support and resistance levels, I can basically look at a chart fairly quickly and I can say, “Yes, there's a technical trade set up here” or, “No, there's not. Yes, it's a continuation pattern or it's a reversal pattern.” Does it have my overall longer term strength or weakness bars with that?” Yes, or no? Therefore, you very quickly develop an understanding and ability to look at a chart, see the trade, take the trade.
Having the confidence in the strategy to take the trade
You have to be able to do that. When you get to that type of rhythm within your trading you then have to have the confidence in the system and the strategy to be able to see that, see the trade, take the trade, and if the trade works out in your favor, fantastic. If it doesn't that's not the end of the world. You still, at the time, saw what you thought was a great-looking trade. You have to have the ability to back yourself and see what you think at the time, and back that up and see the trade, take the trade. If the trade works out then fantastic. If it doesn't, too bad. It's not the end of the world, because not all perfect trade set ups will result in a profitable trade. It's just a part of trading, and you have to understand that and accept that.
You need a simplistic approach to trading
Basically it comes down to having a simplistic approach to trading, see what's on the chart, have that ability to make a decision, and back yourself, and back your strategy. If you do that you'll find that your trading becomes far more enjoyable. They'll be a lot less clutter going on. You'll be able to make clear decisions, and you get away from relying on other things like news feeds and what other people say. That, in my opinion, is the way to declutter your charts, declutter your trading, and become an independent profitable trader.
Get my #1 trading strategy for free – click on the link below
One last thing, below this video I've got a link to my number one candle strategy. If you'd like to get that for free, click on the link below this and really help you with looking for candle patterns and adding some strength and weakness and round numbers, et cetera into your trading. Getting some great feedback from the people, the thousands of people, who have downloaded that strategy for free over the last month or so. If you'd like to join in, click on the link below and you can get in for absolutely no charge whatsoever.
This is Andrew Mitchem, The Forex Trading Coach.