• Skip to primary navigation
  • Skip to main content
  • Skip to footer
Trading Heroes

Trading Heroes

Forex Trading Education

  • Free Tutorials
  • Products
  • Resources
  • About
  • Login

7 Reasons Traders Can See the Same Chart Differently

Trading is weird in that two traders can look at the same chart and see entirely different things. Find out how this can happen in this post.

Home / Forex Trading Psychology / 7 Reasons Traders Can See the Same Chart Differently

Have you ever shown another trader a chart and you saw a great potential long and she saw an equally good potential short?

Or have you taken a trading course and seen the instructor take great trades, but for some reason you simply couldn't see the setup until after the trade closed?

Well, there could be several reasons for this. In this post, I'll show you seven reasons why two traders can look at the same chart and see completely different trades.

I hope that this post helps you understand what could be going on in your own head as well as in the minds of other traders.

More importantly, I hope that it helps you understand that opinions can easily change from person to person, from and moment to moment.

So you need to stick to your trading plan and protect your mental capital against the opinions of others.

2 Traders

SEE ALSO: Learn the RSI Divergence trading strategy that works

1. They're Currently  in a Position

Having some “skin in the game” is best reason to have a strong opinion about a chart. If you are short the AUDUSD and you start talking to a trader who is long the same currency pair, then each of you are probably going to defend your position.

When you take a trade, it's like putting on colored glasses. You will always see the market differently.

So regardless if a trade is good or not, it will always influence the opinion of a trader.

2. Completely Different Trading Personalities

As I have written about many times before, your Trading Personality plays a huge factor in determining the trading strategies that will work for you.

So whenever you talk to someone about trading strategies or positions, it's vital that you first get a feel for what type of Trading Personality they have.

If their personality matches yours, then it's probably beneficial to trade ideas. But if you have totally different personalities, then you can take a look at what they are doing, but it's probably not a good idea to let them influence your trading.

3. Different Timeframe Focus

This is a classic one.

You are in a long swing trading position on the daily chart EURUSD and you start talking to a day trader. As you talk to this trader, he is pretty convincing as to why the EURUSD will start to fall. So you start to second guess your trade, or you might even alter it.

But he could have been talking about what he thinks will happen in the next 24 hours, while your trade would take a couple of weeks to develop. Make sure that you are both analyzing the same timeframe, otherwise it's almost as if you are speaking different languages.

4. Burn Bias

Burn bias

Traders can have bad experiences in trading that can create cognitive biases. It's like if you burned your hand around the campfire as a little kid. You would probably stay away from that fire for the rest of the trip.

SEE ALSO: The Best Trading Psychology Books of All-Time

For me, I lost quite a few breakout trades when I first started trading. To this day, I won't trade a pure breakout entry.

I probably could trade a breakout strategy, but I just haven't tested them. It's not right or wrong, just a bias that I developed from previous experience.

So if another trader tells you that your trade doesn't look good, they could simply be speaking from their own experience of being burned before. That's where relying on your testing and journaling comes into play.

Let the data tell you what to do…not the opinions of others.

5. Different Trading Strategy

A difference of opinion about a chart could come from something as simple as having different trading strategies. Maybe you are a trend trader and the person you are talking to is a countertrend trader.

Well, then you are going to look for very different things on a chart. There is no right and wrong, just different ways of approaching trading.

6. Trading Skill Level

Skill level can certainly play a role in how two traders will look at a chart. A more experienced trader might see nuances in the price action that a newbie might not be able to identify yet.

New traders also tend to jump from system to system a lot and get really excited about the last YouTube video that they just watched. So if you are speaking to someone about a chart, make sure that they have some experience behind their statements.

7. Different Mental States

Finally, if a trader is having a bad day, then that could change the way that she sees the charts. We've all been there…

It starts raining out of nowhere, your car breaks down and you spill coffee on your shirt as soon as you enter the office. Bad days (and mental states) happen to everyone.

If you or another trader are distracted, then that could lead to an inaccurate analysis of a chart. Become a keen observer of your mental state and you will be much less likely to misread the charts.

To get better at becoming more mindful of your mental state, consider meditation or this tool. Also read my article on how to develop a Trader's Mindset.

Conclusion

So those are the most common reasons why two traders can see a chart very differently. Obviously, there's no right and wrong when looking at a chart.

We all have our own trading methods, experiences and biases that tell what what a good trade looks like.

The next time you are tempted to tell someone that they are in a bad trade or you are tempted to alter your trading, based on the opinion of others, be sure to remember this list. They are perfectly good reasons why your opinion is just as valid as the opinion of another trader.

Follow your plan and let your edge work for you.

You Might Also Enjoy

Trading Too Safe Can Also Be Risky
How to Develop a Trader's Mindset for Success
5 Reasons All Traders Should Meditate Regularly

Category: Forex Trading Psychology Tag: Forex Charting

About Hugh Kimura

Hi, I'm Hugh. I'm an independent trader, educator and international speaker. I help traders develop their trading psychology and trading strategies. Learn more about me here.

Top

 

Share This Article


First posted: January 15, 2019
Last updated: May 15, 2020

Footer

Company

  • Support
  • About Trading Heroes
  • Trading Courses and Education
  • Recommended Resources
  • T-Shirts & Trading Gear
  • Charities We Support

Tutorials & Guides

  • Free Forex Trading Course for Beginners
  • Best of Trading Heroes
  • Forex Trading Blog
  • Best Trading Books
  • Forex Trading Strategies
  • What is Forex?
  • Podcast

Community

  • YouTube
  • Twitter
  • Dtube
  • Odysee
  • Flote
  • Minds
  • Private Trading Community
  • Contact
Trading involves substantial risk and there is always the potential for loss. All content on this website is for educational and informational purposes only and is not trading, investment, or medical advice. You should be aware of the risks associated with trading and seek advice from an independent certified financial adviser if you have any doubts. Some links on this page might be affiliate links, where we get a small commission if you purchase through the link. It doesn't cost you anything extra and we only recommend products that we absolutely love. This site uses cookies and using this site means that you agree to the use of cookies.

 

CFTC Rules 4.41 - Hypothetical or Simulated performance results have certain limitations. Unlike an actual performance record, simulated results do not represent actual trading. Also, because the trades have not actually been executed, the results may have under-or-over compensated for the impact, if any, of certain market factors, such as lack of liquidity. Simulated trading programs, in general, are also subject to the fact that they are designed with the benefit of hindsight. No representation is being made that any account will or is likely to achieve profit or losses similar to those shown. Testimonials appearing may not be representative of other clients or customers and is not a guarantee of future performance or success.

 

 

 

 

 

Copyright © 2007–2021 TrueLiving Media LLC | Terms | Privacy | Risk
How to choose a trading system guide

Get the FREE Guide to Picking the Best Trading Strategy For YOU

x