Trading is not the easiest profession in the world to succeed at, as you may well know by now. We need to do everything we can to put the odds of success as far in our favor as possible. However, most traders do the exact opposite; they turn the odds of success against them, most of the time unknowingly.
The single most significant and EASIEST way to tilt the scales of success in your favor, is by simply not watching intraday charts. Time and time again, I have seen traders fail because they are so hyper-focused on short time frames. There are many misconceptions about intraday charts that lead traders to believe watching them provides some type of advantage. In reality, especially to a beginning or amateur trader, watching intraday charts does nothing but impede their progress and decrease their chances of even surviving, let alone thriving in the market.
My Set and Forget Philosophy
If you read my blog regularly, you know I’m an advocate of end-of-day trading, which basically just means I analyze the market at the end of the trading day and place trades based on that end-of-day data. I then adopt a set and forget mentality, not touching trades for the most part, letting the market do its thing, because I know I can’t control what price does. This helps me to avoid most of the emotions that arise from watching intraday price movements. It’s important to note that I do monitor my trades and positions, but I certainly don’t sit around watching them ‘live on TV’ or for entertainment.
The mental advantages that you get when you adopt this set and forget trading philosophy are many and significant. I won’t get into all of them here, but to learn more about them check out my article on set and forget trading.
Don’t Torture Yourself Watching Your Trades
Ever entered a trade and watched it tick-by-tick for the next few days, agonizing over every 20-point swing for or against your position? If you go back to the chart and look at the situation retrospectively, you will see that the market moved from point X to Y, despite the intraday movement and chop. There is no reason to sit there watching all the intraday chop any time you have a trade on. All it will result in is a lot of mental anguish for you, which can lead you to make some pretty significant trading mistakes as we will talk about next…
Don’t be tempted to fiddle with your trades
Watching the intraday screens too much can certainly do a number on your trading mindset. We need to do everything we can to not induce the wrong mindset as we analyze and trade the market, because once we get into the wrong mindset it can be nearly impossible to break out of it.
As we sit at our charts, staring at them and watching price tick over, all kinds of things can happen in our minds. We make up reasons to move our entry orders from where we initially wanted to place them, we move stop losses or targets. We may enter a trade purely on emotion or exit a trade purely on emotion, all by watching the charts too much. However, it doesn’t end there, once you get into this mindset, it makes each subsequent trade more difficult because you are living in the hindsight loop. This is where you over-analyze and thus over-think about the market and your trades, causing you to lose sight of proper trading habits and second-guess every trade you take based on past trades that you missed out on, mainly from being in the wrong mindset and over-thinking.
End-of-Day vs Intraday
End-of-day trading is superior to intraday trading for many, many reasons. Perhaps the most important reason is that a daily chart time frame (end-of-day data) shows you a more important view of the market than any intraday chart does. As a result, any level, or price action signal you see on a daily chart is going to be much more accurate than any level or signal on a lower time frame, generally speaking.
As I discuss in my article on the best chart time frames to trade, the higher in time frame you go, the less market noise and random price movement there is. This of course makes it easier to complete your analysis each day, identify key chart levels, identify stop loss levels and plan out your risk management on any given trade.
When you look at LESS data each day, you have a much better chance of not falling victim to over-trading and trading addiction, something that can cause you to blow out your entire trading account much faster than you imagine.
The below chart examples show the difference between analyzing daily charts and intraday charts. Each daily chart bar is a single bar that reflects 24-hours of data, the intraday chart is hundreds of smaller bars, ask yourself what is a cleaner and less stressful chart to look at to form a view of the market?
First, take a look at this daily EURUSD chart and the clear and obvious pin bar reversal signal that formed…
Next, look at the 5-minute chart of the exact same period of time as the pin bar on the daily chart above. First off, you can’t even see the pin bar signal that lead to a huge decline in price in the subsequent days. Also, there are literally hundreds of bars on this chart, tons of chop, which would quite literally ‘chop’ up your thinking and confuse you, causing you to possibly miss-out on the daily chart trade as a result of over-thinking and over-analyzing…
In the daily chart of the AUDUSD below, you can see a clear set of bullish pin bar buy signals that formed in-line with the previous bullish momentum. A clear buying opportunity for any end-of-day trader; no stress, no worries…
Next, look at the 4-hour chart time frame of the same period of time as the daily above. Now, the 4-hour chart can be traded successfully if you know how to trade the daily properly. But, the point here is to show that even a good time frame like the 4 hour, is not nearly as clear and easy to trade as the daily chart end-of-day data. I don’t know about you, but all I see is choppy sideways price movement on this chart…
This article has explained why watching intraday charts will harm your trading results, and harm your ability to make accurate decisions on a consistent basis. If you want to transition from screen-watching to end-of-day trading and a less stressful trading career and life, you need to start learning to trade end of day, and train yourself to adopt a set and forget mentality. My professional trading course, expands on these concepts in great detail and is the core foundation of my trading approach and beliefs. My personal aim in trading is to spend the least amount of time possible analyzing the market and watching the market so I can avoid the stress and emotions of trading and ultimately enjoy my life and the fruits that my profession offers.