analysis paralysis psychology Short Term Charts: 10 Minute Charts versus Longer Term Charts

Do You Need 10 Minute Charts? Day traders commonly trade 5 minute charts to identify short term trends. http://www.contracts-for-difference.com/ If you've enjoyed this video, please click the like button below and share it with your friends and remember to SUBSCRIBE!

Everybody has a different way of looking at the markets. Anyone who has been trading for any length of time knows that it is a good thing to look at different periods of charts, say picking the next longer-term and next shorter term to the one that you are trading from. This allows you to get a better picture of how security is performing, and the longer-term chart will help in finding support and resistance levels.

Most charting programs allow you to look at prices on a weekly, daily, 4 hourly, 2 hourly, hourly, or shorter time period, sometimes down to every second. If you get too focused on the very short term charts, it can be a problem, unless you are acting on them with a scalping strategy.

One problem is that most charts will auto scale when you look at them. This means that on the very short term charts, say 10 minutes or less, even the small price movements that occur in that timeframe appear large, and this can be very distracting and cause the emotions to run high.

If you are trading over a period of hours, then it is strongly suggested that you do not bother looking at such short time frames. You will find that the movements of the price will go all over the place, and not be useful for your trading purposes. The only charts that you need should be the ones that compare to the length of time that you think you will be holding the security, with a couple of charts either side for general information.

Trading is stressful enough without acting foolishly, and adding to the emotion. It has been said many times that you need to keep emotion out of trading so that you can make profitable and clear decisions. For daytrading, you should not need to go down much below one hour, and for short term trading where you are looking for profit in days or weeks, the daily chart is appropriate.

It is easy to succumb to information overload. The Internet makes available far more information than anyone can possibly assimilate in real time, and there is a natural tendency to believe that having more information makes you more informed, and being more informed leads you to more informed and better choices. You need to learn to restrict your intake of information to the things that are important for the job in hand.

There is a phenomenon called Analysis Paralysis. This states that you can spend a lot of time running around in circles, performing deeper and deeper analyses, and never finding time to do anything of significance. The abundance of information offered by the Internet is one of the main causes of Analysis Paralysis, and you need to take care to ensure that you do not give in to such activity, but concentrate on what you need to know.

analysis paralysis psychology Short Term Charts: 10 Minute Charts versus Longer Term Charts
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