You’re an emotional creature. Admit it. It says so right on your little DNA strands. While such an endowment allows you to experience the spectrum of emotions that accompany life, it really throws a wrench into the magical machinery of investing. No matter your I.Q., aptitude, or past successes, once you hit the buy button you’re a dummy like the rest of us.

You don’t need protection from the monsters under your bed, but the demons in your head.  Pogo, stumbled upon this trading truth while traipsing through Okefenokee Swamp.

You, friend, are your worst enemy. And if you don’t discover the elixir for staving off self-sabotage quickly you’ll suffer the fate of so many traders who have come and gone before you: Death and destruction. At least, that of the financial kind:)

But, worry not. All you need is a trading plan. Rules, baby, you gotta have them. Perhaps we’ll have a comprehensive heart-to-heart on that in the near future. Today I wanted to shed some light on a particular aspect of a trading plan that rarely receives its due: the frequency of monitoring positions.

How often do you check-in on your positions? How often do you look at what the market is doing? Can too much monitoring be a bad thing?

Instinctively most swing and position traders want to keep tabs on their beloved trades not only day-to-day but minute to minute.  Excessive observation is the proverbial double-edged sword. Each pro is accompanied by a con.

Advocates of 24-hour monitoring (or at least 6.5-hour monitoring) would contend those who track the intra-day action in all its glory have the ability to identify quicker entry and exit points.  Since price trends originate on small time frames first, traders with the ability to follow a 5-minute chart are rewarded with an early warning sign that a shift in trend might be in the offing.  Take today’s oversold bounce for instance.  Market observers utilizing the 5-minute chart would have been able to identify the turn quicker than someone wielding a daily chart.

Of course, there are numerous mistakes sure to be committed by swing and position traders employing minute charts willy-nilly.  It increases emotional involvement leading many to draw trade altering conclusions from insignificant noise. Molehills are mistaken for mountains, shallow dips for deathly descents. Longs and shorts alike may get shaken out of perfectly reasonable positions simply due to a knee-jerk reaction to a 5-minute reversal.

Your IQ already drops in half once a trade is entered.  Don’t exacerbate the problem by excessive observation.  If you insist on following the intra-day action be sure to develop some hard, fast rules to help you differentiate between meaningful moves and mild choppy-chop. Deal?

Financial freedom is a journey

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