Chart Analysis tips : Clear your mind before analyzing

Sometimes analysts and traders like myself tend have a bias when reading charts and this can be detrimental when analyzing charts.

For example, if I am holding a buy position on stock A, I tend to be bullish on stock A when analyzing the chart and make recommendations. I'll try to find reasons that price may continue to go higher by using indicators that suggest so and ignoring other indicators that provide weak signals.

Another example is that when analysts hear good news about the market from all sides, they tend to be bullish in their bias. Furthermore... analysts always wanted to be in the safe side. If the analyst is wrong, at least others are wrong as well and they share the blame. If the analysts is the only one who is wrong, then all the blame will be on him/her. Furthermore, people tend to remember mistakes more than good things.

"We sometime want to see things that we only want to see... hear things that we only want to hear".... This quote is not from me but I remembered I learned this somewhere.

To analyze a chart effectively, we need to first of all take our biasness out of our mind. Clear our minds. I know it is hard, but we need to have clear minds, not having any prejudices.

Once you are able to this, you will find improvement in your analysis...

Article by Benny Lee