The Power of Detailed Trading Analysis: 3 Tips for Success
September 5, 2023
When analysing the markets, it's not just the high-level details we're interested in. The finer details matter too. Succeeding in the markets is all about recognising and understanding the nuances in the price movements.
However, even when traders identify these intricate details, they often overlook them as their session progresses. It's too much information to constantly keep in mind.
The tips I'm about to share with you solve that problem. They'll help you gain an advantage from all the details in your analysis and have you organising it all more professionally.
Tip 1: More detailed prep to start the session
Most traders understand the value of a trading journal. Those who do keep journals usually take notes about their analysis and decision-making process after closing a trade.
However, on the occasions when they analyse an opportunity and decide not to take the trade, they have no record of it.
I realised that by doing this, I was holding back my trading in two major ways.
Firstly, I couldn't look back and see where there were opportunities I was consistently filtering out that I should actually be trading (this one is a topic for another time).
And secondly, I couldn't use the analysis again in the future (I'll elaborate on this with the next tips).
Instead, I now create a daily page in a note-taking app (I prefer Notion or Roam Research). I'll create sections for each of the markets I'm analysing and take bullet point notes explaining different parts of my analysis.
Here's an example:
This is a bit more detailed than it needs to be. If you trade the same way each day, it's likely you'll be able to understand what you mean with just a short-hand description.
Since I trade intra-day or intra-week mostly, it means many of these analysis points will be changed and updated throughout the session. So each day I need a new document.
However, the longer-term analysis usually remains consistent across sessions. So at the start of a trading session when I open a new document, I'll copy the relevant notes from the previous session into the new one. That way, I'm constantly aware of the points I raised in previous trading sessions.
It also means, at any point in time I can refer back to this document for specific reasons, which we'll discuss more in Tip #3.
Tip 2: Chart annotations to add context
Writing detailed analysis notes is great, but the more important thing is making sure you use them. This is where a lot of traders go off track.
You may notice in the screenshot above that there are codes being used for things, such as 'TL1' or 'F2'. These correspond with labels I apply to my charts, as you can see in this screenshot:
As I said earlier, trading is often about the nuances of price moves. When we add levels to our charts, it's often the case that we understand certain details about them. Maybe we observed the price interacting in that area before, perhaps we were unsure about a certain aspect of that level.
If we just add the level to our chart without the additional context, in future we might miss or disregard that important contextual information. But by adding labels that correspond to notes, we have a constant reminder of the nuances we need to keep in mind.
I also do this when there are significant moves in the markets. I'll label the move on the chart so 'future me' understands what caused it. You might also choose to label highs and lows of the day/week/month or opening and closing times (although some platforms can do this for you automatically).
In most trading platforms, there are two different types of text you can apply. One that stays attached to the same point of the chart as time goes by (or when you move backwards on the chart), and one that stays permanently anchored to the same place on your screen.
For the chart annotations, I use labels that will stay attached to the same point on the chart.
I use the ones anchoring to the same spot on the screen for reminders. For example, I'll often add a note in the bottom-left corner of the screen to remind myself about the economic data releases or other disruptive events coming up in that session.
Tip 3: Using previous analysis more conveniently
This final tip is the cherry on top.
It's great to have current session annotations on your chart, but as time goes on, adjustments are inevitable. You can't keep all levels on your charts forever, it'll become a mindf**k!
But inevitably, the price will return to areas it's been in before. At those times, it can be helpful to reflect on what your analysis was before to get more insights about what may happen this time.
I have an easy way of bringing back old analysis so I can review it at any time.
After each trading session, I save my charts under a new profile with the date as the filename. To do this in MetaTrader you simply go to File > Profiles > Save As (similar functions apply to other platforms too, such as TradingView or Sierra Chart).
That way, when I need to review the analysis for a particular date, I just find the relevant profile in my folder and load it up. Simple!
Saving the profile is just a 30-second addition to my end of session routine.
There are many other benefits of using this approach too, including to review and improve your performance. If you get started, you'll soon realise how helpful they are.
However, when I share these tips with traders, I often get one of two responses. You might be thinking these things too. So here are my thoughts on them:
"This will take too much time and effort each day."
This is where many traders go wrong. They want to find an easy way to succeed. But, being professional in anything involves putting in a lot of effort.
In reality, the more you prepare, the more you save time in the long run. Not only in terms of speeding up your development, but also when things go wrong.
When traders are underprepared and face unexpected situations in the markets, they have to invest more time and effort in a panic to figure out what's happening. When you're prepared, you can calmly check your notes and proceed.
"If I spend time on this I'll end up missing all the opportunities."
For most traders, this would probably be a good thing.
No time for notes? It's likely you're taking too many actions in the markets and overtrading.
By preparing in a more detailed way, it will also help to organise your thinking so you can be sure you're analysing your opportunities appropriately.