Mathew Barnes |
Whether you have been around the markets for years or whether this is the first trading newsletter you’ve ever read, you will have been presented with various different tools and techniques for interpreting market action.
The Elliott Wave. Moving Averages. WD Gann’s Time and Price techniques. Fibonacci numbers. Fundamental analysis. These are just a few of the techniques that are available to traders and investors.
Take a moment to list all the different tools that you have in your personal trading tool box. It helps to do this, as sometimes you can have so many tools “floating” around in your head that you can forget about a few of the most important ones!
Next, break them into different groups. There are many ways you can divide your tools, but for me the simplest way to start is by differentiating between tools that tell you which way the market is heading and your actual entry signals.
For example, an ABC Long Setup is a trading setup that would allow you to potentially enter a Long Trade. This is a Trade Entry Tool.
A Gann Angle, on the other hand, might indicate that the market has met resistance and is likely to move lower. This is an analysis tool.
With the vast amount of tools at our disposal (ProfitSource has over 100 different tools to play with), it is very easy to get confused quickly. More tools does not mean more clarity – in fact, it can sometimes mean the exact opposite. If you try and apply all your tools at the same time, you can end up with a chart that looks like Chart 1, below.
Chart 1
click to enlarge
There are only eight trading tools applied to this chart – less than the average trader would have in their tool kit – but you can see it is already a mess.
It is easy to see that without discipline and careful organisation, each additional trading technique makes life as a trader harder and harder, not easier and easier as it should.
I like to set up saved charts on the markets I trade with only one or two techniques on each chart page. (Click on “Action” then “Save Chart Page As” to save a chart) This allows me to stay on top of all my techniques and saves me the time of having to create each chart every time I want to analyse a market.
In Chart 2 below you can see how the Navigation Tree in ProfitSource can be used to very quickly access all your Saved Charts once they are set up.
Chart 2
click to enlarge
You might like to have a folder for a group of stocks like the ASX200 or a group of currencies. Within that folder, you will have folders for individual stocks or currencies, for example, BHP and ANZ, or the Euro and the British Pound.
Then, you might have a separate series of folders within the Euro, containing all your saved charts, with the tools you prefer to use.
Once you have these techniques established, you can scroll through them quickly and easily using the Navigation Tree and work out whether the market is likely to head up, down or sideways. Once I have a clear picture in your head, only then will I start looking at potential Entry strategies.
We all have a different tolerance level for how many techniques we can use at once. I’ll be sharing my own personal strategies during my upcoming online Currency Forecasting Seminar on 19 June.
Getting organised and making the techniques work for you is just another of many steps on your trading journey. Enjoy!
Be Prepared!
Mathew Barnes
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