Trading is all about Decision Making. As traders we are
continuously making decisions. We need to decide on the price levels to
initiate a trade, which direction to trade, where to keep stop loss where to
exit etc. Good trading decisions will make money for us .Being consistently profitable
is becoming better at this decision making skill.
Any decision making process involves three steps. These are Gathering
information, evaluating the necessary inputs and deciding upon the possible action.
Information overload is a major constraint for effective decision making. So we
need an effective filtering of information inputs to a manageable level. Focus only on the right and important
information . Avoid the extra information having negligible impact.
I have seen traders monitoring a plethora of inputs. They
track everything you can think of. Elliot waves, Fibs, Gann, Parabolic SAR a dozen moving averages, different oscillators,
trend lines and channels. Sorry, I forgot the floor pivots and Camarillas.
Supports and resistances are also very important.Oh No, I almost missed the time cycles,Wolfe waves and ORB.
If you mark all these levels on a chart, it will cover the
entire chart space. Monitoring all these levels is almost impossible. Even if
you do, it is not going to make you profitable. Instead it is going to make you
more confused. But it will help the “Trading Gurus” for sure. They can find some or
the other reason for all the price behavior and convince you that " lack of discipline"
is the root cause of your trading failure.
The sooner you define your decision making process, the
better. Decide on your information inputs, how to weigh them, and what actions
to take on them.
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