Jump to content

Welcome to the new Traders Laboratory! Please bear with us as we finish the migration over the next few days. If you find any issues, want to leave feedback, get in touch with us, or offer suggestions please post to the Support forum here.

  • Welcome Guests

    Welcome. You are currently viewing the forum as a guest which does not give you access to all the great features at Traders Laboratory such as interacting with members, access to all forums, downloading attachments, and eligibility to win free giveaways. Registration is fast, simple and absolutely free. Create a FREE Traders Laboratory account here.

RichardCox

Avoiding Common Chart Viewing Mistakes

Recommended Posts

Since it is impossible to just instinctively know where prices are heading in a given currency pair at a given time, all traders can do before placing positions is to take the information that is commonly available and use it to isolate high probability trading setups that will have successful results over the long run. Charting analysis plays a major role in all of this but there are some common mistakes that are seen in many cases as traders look to limit their fields of information in order to focus on a certain pricing pattern or support/resistance level.

 

This is essentially the primary value of charts in forex trading, that they can show traders the history of the various ways a currency's value has changed and performed over time. Using these histories, traders can identify key areas where markets have met excessive supply (resistance) and have have difficulties rallying or where markets have met excessive demand (support) and have failed to continue bearish moves. This information can be essential in determining trading parameters (in setting trade exits and entries) and in identifying where the momentum lies for the next impulsive move. But, in many instances, traders can become overly myopic or granular in the way their charts are viewed and while it is true that some information must be isolated (of course, it is impossible to take all of the available information into consideration), there is also a very common mistake that is made when traders look at price activity that is contained in a range that is too small for the stop loss parameters that are being implemented. In these cases, traders can easily “miss the bigger picture” and get caught on the wrong side of the next impulsive move for your chosen time frame.

 

Avoiding an Overly Myopic Viewpoint

 

When traders become overly myopic when viewing charts (which essentially means expanding these charts to the point that only a few dozen candles are visible), the larger trends can be missed and some of the main beneficial charts can provide can be lost. Consider the example below in the AUD/USD:

 

1.gif

 

Depending on your trading strategy this chart can be viewed in a few different ways. To many, this chart would appear to show that prices are in a downtrend and have shown a corrective retracement into the 1.0580 region. While there is nothing wrong with this analysis, it should be remembered that this is a zoomed focus on the Hourly chart and that pulling out to a wider angle can yield a very different picture:

 

2.gif

 

Here, the wider view seems to show the opposite scenario, that longer term price momentum is in the upward direction and that more recently prices have made a corrective retracement to the downside. These are both Hourly charts, but the results are very different when a zoomed focus is used.

 

Setting Chart Parameters

 

From the example above, we can see that longer term and shorter term views can very greatly, even on the same charting time frame. Because of this, some general rules should be established in your trading plan so that the “bigger picture” is not missed when trading currency pairs. Of course, there might be very little difference in viewing 100 price bars versus viewing 99 but failing to see a “full view” of price activity in a given time frame can leave a trading analysis distorted of where prices are operating on that time frame.

 

A better idea, in general, is to start with the larger picture, and work your way into the smaller view if your trading plan requires more details. It should be remembered that shorter time frames can be used in lieu of the expanded chart view and, as a general rule traders should consider the following ranges for the accompanying time frames:

 

15 minute charts: 3 to 5 trading days worth of price information

 

Hourly Charts: 2 weeks worth of price information

 

4 Hour Charts: 4 to 6 weeks worth of price information

 

Daily Charts: 1 year's worth of price information

Share this post


Link to post
Share on other sites

For what it's worth these charts do not show trends to me! Looks more like a lower and higher trading range with a short bull spike between them.

 

Great how we can all see something quite different. :)

Share this post


Link to post
Share on other sites

Thanks RichardHK, to share some common chart viewing mistakes. It is helpful for me and new traders as well. Some traders are not able to analysis chart properly and due to this their trading decision sometimes go in wrong direction.

Share this post


Link to post
Share on other sites

Join the conversation

You can post now and register later. If you have an account, sign in now to post with your account.
Note: Your post will require moderator approval before it will be visible.

Guest
Reply to this topic...

×   Pasted as rich text.   Paste as plain text instead

  Only 75 emoji are allowed.

×   Your link has been automatically embedded.   Display as a link instead

×   Your previous content has been restored.   Clear editor

×   You cannot paste images directly. Upload or insert images from URL.


  • Topics

  • Posts

    • How's about other crypto exchanges? Are all they banned in your country or only Binance?
    • Be careful who you blame.   I can tell you one thing for sure.   Effective traders don’t blame others when things start to go wrong.   You can hang onto your tendency to play the victim, or the martyr… but if you want to achieve in trading, you have to be prepared to take responsibility.   People assign reasons to outcomes, whether based on internal or external factors.   When traders face losses, it's common for them to blame bad luck, poor advice, or other external factors, rather than reflecting on their own personal attributes like arrogance, fear, or greed.   This is a challenging lesson to grasp in your trading journey, but one that holds immense value.   This is called attribution theory. Taking responsibility for your actions is the key to improving your trading skills. Pause and ask yourself - What role did I play in my financial decisions?   After all, you were the one who listened to that source, and decided to act on that trade based on the rumour. Attributing results solely to external circumstances is what is known as having an ‘external locus of control’.   It's a concept coined by psychologist Julian Rotter in 1954. A trader with an external locus of control might say, "I made a profit because the markets are currently favourable."   Instead, strive to develop an "internal locus of control" and take ownership of your actions.   Assume that all trading results are within your realm of responsibility and actively seek ways to improve your own behaviour.   This is the fastest route to enhancing your trading abilities. A trader with an internal locus of control might proudly state, "My equity curve is rising because I am a disciplined trader who faithfully follows my trading plan." Author: Louise Bedford Source: https://www.tradinggame.com.au/
    • SELF IMPROVEMENT.   The whole self-help industry began when Dale Carnegie published How to Win Friends and Influence People in 1936. Then came other classics like Think And Grow Rich by Napoleon Hill, Awaken the Giant Within by Tony Robbins toward the end of the century.   Today, teaching people how to improve themselves is a business. A pure ruthless business where some people sell utter bullshit.   There are broke Instagrammers and YouTubers with literally no solid background teaching men how to be attractive to women, how to begin a start-up, how to become successful — most of these guys speaking nothing more than hollow motivational words and cliche stuff. They waste your time. Some of these people who present themselves as hugely successful also give talks and write books.   There are so many books on financial advice, self-improvement, love, etc and some people actually try to read them. They are a waste of time, mostly.   When you start reading a dozen books on finance you realize that they all say the same stuff.   You are not going to live forever in the learning phase. Don't procrastinate by reading bull-shit or the same good knowledge in 10 books. What we ought to do is choose wisely.   Yes. A good book can change your life, given you do what it asks you to do.   All the books I have named up to now are worthy of reading. Tim Ferriss, Simon Sinek, Robert Greene — these guys are worthy of reading. These guys teach what others don't. Their books are unique and actually, come from relevant and successful people.   When Richard Branson writes a book about entrepreneurship, go read it. Every line in that book is said by one of the greatest entrepreneurs of our time.   When a Chinese millionaire( he claims to be) Youtuber who releases a video titled “Why reading books keeps you broke” and a year later another one “My recommendation of books for grand success” you should be wise to tell him to jump from Victoria Falls.   These self-improvement gurus sell you delusions.   They say they have those little tricks that only they know that if you use, everything in your life will be perfect. Those little tricks. We are just “making of a to-do-list before sleeping” away from becoming the next Bill Gates.   There are no little tricks.   There is no success-mantra.   Self-improvement is a trap for 99% of the people. You can't do that unless you are very, very strong.   If you are looking for easy ways, you will only keep wasting your time forgetting that your time on this planet is limited, as alive humans that is.   Also, I feel that people who claim to read like a book a day or promote it are idiots. You retain nothing. When you do read a good book, you read slow, sometimes a whole paragraph, again and again, dwelling on it, trying to internalize its knowledge. You try to understand. You think. It takes time.   It's better to read a good book 10 times than 1000 stupid ones.   So be choosy. Read from the guys who actually know something, not some wannabe ‘influencers’.   Edit: Think And Grow Rich was written as a result of a project assigned to Napoleon Hill by Andrew Carnegie(the 2nd richest man in recent history). He was asked to study the most successful people on the planet and document which characteristics made them great. He did extensive work in studying hundreds of the most successful people of that time. The result was that little book.   Nowadays some people just study Instagram algorithms and think of themselves as a Dale Carnegie or Anthony Robbins. By Nupur Nishant, Quora Profits from free accurate cryptos signals: https://www.predictmag.com/    
    • there is no avoiding loses to be honest, its just how the market is. you win some and hopefully more, but u do lose some. 
    • $CSCO Cisco Systems stock, nice top of range breakout, from Stocks to Watch at https://stockconsultant.com/?CSCOSEPN Septerna stock watch for a bottom breakout, good upside price gap
×
×
  • Create New...

Important Information

By using this site, you agree to our Terms of Use.