My Junk drawer

I think everyone has one. It’s the top dresser drawer for me. It’s got that neat clear key chain from a Wired show that lights up, a small remote control car, my (unsorted) collection of state quarters, all the wheat pennies I’ve obtained in the last few years, all sorts of stuff that was really cool at the time.  I had to save it somewhere.  When I need it, I’ll know where it is.

Turns out that because there is so much stuff in the drawer, it’s hard to locate things.  I’ve already realized I shouldn’t have placed those sharp objects in there. So every once in a while I clean it and today’s the day. Typically it gets messy about every year or so.  Not this time.

In one of the Forex courses that I took when I started, it was mentioned from a veteran trader that often times a novice can be deduced by the number of indicators and lines on the charts.   If there’s a lot of things going on the chart, it most likely is a novice at the chart.  At the time, I could intellectually understand the comment. As days went on, I started learning more and more and my charts reflected it. 

Just like cleaning the drawer, I cleaned up my charts.  I’ve started with a clean screen.  Well, almost.  On one of my 24 inch LCDs, I have 4 charts – daily, 4 hour, 1 hour and 5 minute.  Seeing all time frames has really helped put things into perspective.  Starting with the daily chart, I have the nearest support/resistance lines. On the four hour I place the nearest support/resistance lines and add the daily support/resistance lines. Likewise on the 1 hour.   The 1 hour also has a modified MACD indicator.  The 5 minute only has it’s own S/R lines. 

I was told that candles are not as meaningful on the 5 minute chart. So to distract me from looking at the candles there, I just plot the closing price as a line graph.

After all this, I can look at my charts and fairly quickly determine when I should make a trade.  Actually I found that if I look at the charts from across the room, the trend is very apparent. Squinting seems to work as well.

This has also helped me focus on price and not try to go after that holy grail that everyone is selling for one day only (today). My trades are becoming better and my stress level is lowering.

It feels really good to have a clean drawer and a clean chart. They’re going to stay that way. Really.  I mean it this time.

 

It’s easier to see a trade potential on a clean chart

 

 

Posted on April 7th, 2009
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