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Where you stand determines your perspective. Remember the story of four blind men and the elephant? They were taken to an elephant and asked to touch it to find out what they were touching. Each one touches a different part, but only one part. One touches the belly, one the leg, one the tail and another the tusk. They then compare what it was that they were touching and discover that they all disagree on what they were touching. Reality may be viewed differently depending on your perspective. If you only have a limited perspective your conclusions will be limited too.
Think of the captain of a ship. You would find him or her at the highest point of the ship. From there they can see furthest and navigate the best. They would not do such a good job if they were down in the guts of the ship, the engine room. Standing in the engine room, each up and down motion of the ship might puzzle you, and you may not know if the ship is going, up or down. Same analogy applies to flying. The cockpit is not at the tail of the plane. It is at the point where you have the best view of where the plane is going.
The same principle applies to your trading. Where you stand determines your perspective. If you are trading using one minute bars, that is like being in the engine room of the ship. One minute up, one minute down, are we heading up or down? Are we staying where we are? Jump to a daily scale and your perspective is different. Bigger timeframe charts tell a completely different story.
Markets never go in a straight line from top to bottom and bottom to top. They go up and down, zigzagging all the way. Your perspective will help you determine whether the zig or the zag will be more profitable. David Bowden says that he was happy to “capture 50% of a move”. Others have said: “Buy on pullbacks and sell on rallies”. It is the same principle. Your perspective determines your entries, exits, tight or generous stops and of course your bottom line.
Which perspective do you use then in your trading? Is intraday trading wrong? Should you use monthly, quarterly, or yearly charts? Every person has their own style in trading. To assist you in your trading, study charts different time frame charts. One day swing charts, two day swing charts, three day swing charts and weekly swing charts and monthly swing charts are different ways of standing back and looking at the market from different perspectives. It is worth your while noting how often they tell you the same thing and how often they conflict. How often do they change trend? Which one is a better indicator of where the market is going?
Werner Erhard said: “Ride the horse in the direction it is going”. If you are finding yourself guessing the direction of the market, missing out on runs that you could have been on, where you are standing and your perspective may need to change or expand.
Believe Achieve
Sinan Koray
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