HOW TO DEAL WITH INFORMATION OVERLOAD WHEN LEARNING TO TRADE
Have you ever felt overwhelmed? If so then don’t worry, because it’s completely normal. With the amount of information that is available about how to trade, I feel as if for the newbie, knowledge-seeking trader it’s almost impossible not to.
The unique thing about trading is that there are so many ways to become successful. However, this is what makes it very easy for newer traders to think that they have to learn each and every one of these ways in order to be successful.
Something that I commonly see is a trader stuck in a trade-state called “analysis paralysis” where their mind is analyzing so much at once, that they actually become frozen in the moment due to an uncertainty of what to do next. A solution to this problem is simplifying the process on two fronts
FOCUS ON YOUR FOCUS
Instead of trying to do it all, the first bit of advice that I give to each new client I work with is to start simple and focus on a single way of trading. It honestly doesn’t matter what you choose, but once you decide you need to have tunnel vision and ignore everything else that the market is doing.
The next step after deciding on a single way to trade is developing a rules-based process for how you evaluate the market and eventually decide what trades to take and when to take them.
MY RULES BASED PROCESS
I follow a four-step process when analyzing the charts called I.P.D.E.
IDENTIFY — What has the market done? What is the market currently doing? I’m a structure-based trader so most of my analysis has to do with where the market is at relative to previous levels of support & resistance.
PREDICT — Based on the above, what do I predict the market is likely to do next. These predictions aren’t my thoughts, rather rules-based predictions based on using an “If/Then” syntax. These predictions also come in 3 parts. 1) What direction is the market likely to go it? 2) How far is price likely to go in that direction & 3) How is the market likely to move if it goes in that direction?
DECIDE — After I’ve formed my bias I then decide if or how I can get involved in the above prediction. These are based on rules I have for confirmation of my prediction.
EXECUTE — Waiting for my reason for entry and pulling the trigger on the trade.
When you can simplify the process, you’ll become a lot more comfortable ion what you’re doing and when you’re more comfortable in what you’re doing you’ll feel a lot less overwhelmed.
For more on this subject please check out the podcast episode that I did on it below
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