12th September 2015 Kis 4 Being Specific
Hi Guys, here we are again thinking about those issues that tend to make trading more complicated and difficult than it needs to be. This time I would like to tackle the subject of being specific. Here are some typical comments from the internet about what is happening to the Forex market. I would like you to think carefully about each statement and how you expect it to affect the next trade you are thinking about making. I will number them and then we can discuss each later.
- There is a strong trend on the Euro.
- It is heading for the tunnel.
- I have a target of 1.2345.
- The Yen is reversing.
- BO3 soon on the Pound.
- The Oscillators are about to cross.
So here we go. Did you jot down some notes? I did. “Too vague. Not enough information.”
If the people who are making these comments are trying to help other traders to identify meaningful moves by the market and to be profitable then maybe some information is lacking. If these types of comments are made for personal use then maybe being more specific would speed up the learning curve. Let us look at each one.
There is a strong trend on the Euro.
- What does strong mean? Does your definition of strong mean 10 candles or 50? Does it mean 30 pips or 300 pips? Does it mean a quick move or a steady away continuous but gradual move
- Which timeframe? If I am trading the H4 timeframe then I am not interested to know about a “strong” (whatever that means for you) trend on the M1 so I can ignore your comment.
- Will the trend continue or are you saying it is over? This is the really important view. We all want to know if a trend is likely to continue or reverse. What we really need though is information about why you have a particular view so we can learn to see the signs ourselves. We need details about how you have come to your conclusion.
It is heading for the tunnel.
- What is heading for the tunnel? This is a common omission. Bloggers etc. get so involved in their analysis they forget to state what to them is obvious. Similarly, if more than one currency pair is being discussed in a forum you need to know which one is being commented on.
- Which timeframe? If this is the Daily Tunnel then the M15 may have many twists and turns before price gets there.
- Do you mean it will go there now without a retrace? Do you mean it will stop there?
I have a target of 1.2345.
- Which timeframe? I think you are beginning to get the message on this one.
- When? Useful to know when you should review a situation.
- Why is that your target? Once again it is the details of why you have that target that are of more use to us than the target itself.
The Yen is reversing.
- Which timeframe? Oh no not this one again. There can be many reversals on the M5 during an H4 move.
- Do you mean correcting or continuing?
BO3 soon on the Pound.
- Which timeframe. We want to be able to go straight to a situation and not have to trawl through all the timeframes available to us until we find what you are referring to.
- Do you mean up or down? Speaks for itself.
- How soon is soon? Linked to timeframe this one. You need to know how soon you need to be watching your charts.
The Oscillators are about to cross.
- Which Oscillators? Why do you think they will cross? Is it possible they will not? If someone is predicting the future then you need to understand the analysis that lead them to that conclusion.
So in a nutshell. If you are making your own notes then be detailed and specific because it will help you in the long term. Try revisiting some of your old notes. Are they detailed enough or are they ambiguous?
If you are making views public then spare a thought for the reader and again be detailed and clear about what you are saying and why you are saying it. In terms of “Keeping it Simple”, what I mean is that if you are detailed and specific you will avoid confusion and uncertainty both in your own understanding and that of others.
I hope this was of some help. See you next time.
To see my other blogs type “Keeping it Simple” into the Blog search box.
Blog 1 Get a Trading System
Blog 2 Managing Expectations
Blog 3 About Demo Accounts