When I mention Robin Hood, what are the first things that come to mind?
- He was the guy who stole from the rich and gave to the poor.
- He had a bow and arrow.
- The 1938 original movie starring Errol Flynn.
- Or Maybe the parody movie from 1993 called “Robin Hood Men In Tights”.
To me his bow and arrow is what trading is all about.
Think about this… Imagine taking an arrow and carefully placing it in the bow and then fully pulling the arrow back to full tension. If we take one step back for a second, you need to know ahead of time what your intended target is. Then you pickup the bow and aim and then shoot.
If you’re skilled as a marksman/woman then you’ll hit your target more often then not. So let’s say your hunting deer and you spot a lone deer and then carefully get your bow ready and take a steady aim… Well unless the deer suddenly moves you have high odds for success. Now the majority of traders approach trading the exact opposite. They go into the forest and see a herd of 5 deer darting back and forth and keep moving their aim from one deer to another.
The indecision and lack of 100% focus on one target makes them go home empty handed.
So to bring it back to our world as traders… Currency traders will often watch 10 – 20 markets. Well think of each market as a deer. The minute you take your eye off one you’ll miss the opportunity and this keeps repeating.
Now to complicate things more… Say you watch the 5, 15, 60 minute charts. On top of that you look at the 4 hour and daily charts for a bigger view. Think of each one of them as even more deer screaming for your attention.
Next add in 3 or more technical indicators and you’ve added even more distractions. On top of that, if you read my article last week, our attentions spans have decreased greatly due to all the distractions from email, social media, web surfing etc.
Does this sound familiar to you? It’s like before you sit down to trade you feel like you know what to do but… Once you start trading you can no longer focus on one deer?
So what’s a possible solution?
1. Once again remove all social media distraction.
2. Focus on no more than 4 currency pairs. If you are scalper or day trader 1 or 2 pairs.
3. Limit your time frames to 2. For example, the 60 minute for the big picture and the 15 minute for entries.
4. Stick to one simple strategy with as few of rules as possible.
5. Keep you indicators to 3 or less.
6. Trade off slower charts like the daily or 4 hour chart. This puts things in slow motion. Think about a deer
running in slow motion versus the skittish way they dart back and forth normally. Much easier to hit, right?
7. Try trading the same hours everyday as this will help you become familiar with the way the markets behave
at that time. The times of day does effect market movement greatly, especially during the Asian session. (Primarily slow and choppy)
Here’s some examples of simplifying things…
1. Instead of watching 50 tech stocks just trade the ETF or index.
2. If you are watching a large amount of stocks just focus on a handful of the market leaders in that sector.
If you want to be a buyer then buy the “800 Pound Gorillas” in that sector and if you want to be a seller only
“Sell The Dogs” in that one.
3. Day trade just 1 index market like the e-mini Dow or Nasdaq. Stick to just the first 2 hours from market open.
4. Day trade a handful of stocks in the first 2 hours from market open.
5. Scalp trade just 1 stock within the first 60 minutes of market open.
6. Trade stock options using the daily chart only.
The important thing to understand is that one isn’t better than the other but… What’s vitally important is that
you pick one that suits you and that you stick to it.
I could go way way deeper into this topic but I think you get the point by now. The bottom-line is that your focus will determine if you get the deer or not…
I hope this gives you a “Light Bulb Moment” or two.
Enjoy your weekend, Jeff