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One of the most common mistakes new day traders make is believing that trading the markets has a stable reality.

There is not any. Everything is relative.

Knowing this can actually make your trading easier and allow you to trade with more confidence and higher profits.

We’ll explore the concept in this article by discussing one of the most basic concepts in technical analysis: trend.

Traditionally, an uptrend is defined as the market making higher highs and higher lows, and a downtrend is defined as the market making lower highs and lower lows.

You can look at a 2 minute chart of any market and find a time period when the market is in a downtrend. But does that mean that “the” trend is down? Not necessarily.

If you look at the same point in time on a 60-minute chart, you can see that what looked like a downtrend on the 2-minute chart was actually a very short retracement in a strong uptrend on the longer timeframe.

And you can take it a lot further.

You can have a 1-minute chart, a 2-minute chart, a 3-minute chart, a 5-minute chart, a 10-minute chart, a 15-minute chart, a 30-minute chart. View a chart, a 60 minute chart, and even a daily chart. … and they will all look a little different and give you different perspectives on “trending”.

So what’s the real trend?

None of them!

Everything is relative.

I know people who trade a lot of computer monitors because they are watching 4, 5, 6 or more time intervals of their market at the same time. This is a mistake because it only leads to confusion. It is too much information and completely confusing.

Einstein said we should make things as simple as possible, but not simpler.

While it did not refer specifically to day trading, of course, it is good advice for any area of ​​life, including day trading.

Since everything is relative based on the reference point you set, a trader simply needs to choose an interval of time that they are comfortable with (based on the speed of execution required, risk involved, trading frequency, etc.) on their statement table.

Then I recommend that you also use another chart with a higher time interval (I use one that is three times as long as my set up chart) so that you can see the market from a different perspective. This gives you a bird’s eye view of the market and allows you to experience a “greater energy” so that you know if it is working with you or against you.

This will keep your trading easy … but not too easy.

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Source by Dr. Barry Burns