Recently, I stumbled upon an intriguing debate between two trader colleagues that completely changed my perspective on the market. It kicked off when one of them, an enthusiast of technical charts brimming with indicators, asserted, "the more, the better." You know, all those moving averages, MACD, RSI, and other "aids" that he believed should precisely predict market behavior. He was a typical tech enthusiast who thought if a chart didn't have 50 lines, you might miss out on a significant portion of profits.
On the other hand, his opponent, a minimalist in trading, simply brushed off the idea: "Did you hit your head? Why do you need all those extra lines?" Initially, I thought it was just another loud argument over nothing. However, as I delved deeper, I realized there was more to this discussion.
This second trader, whether you call him a Renko or Point & Figure fan, advocated for stripping away excess and concentrating on the essentials. And, frankly, he had a point. What's the use of sitting with a plethora of settings and indicators if the chart becomes unreadable? He shared how transitioning from traditional charts loaded with indicators to the trusty Renko charts had improved his results.
"I stopped blindly following signals and began observing the market differently," he said, as if he had uncovered the secret to perpetual motion. It was a revelation, brimming with energy.
So what's the essence, you ask? It's straightforward: minimalism on charts lets you cut through the noise when prices move but don't provide real insight. By focusing only on crucial moments, it becomes easier to identify where support and resistance lie. Renko charts eliminate the unnecessary—just the bricks that form when the price shifts a certain distance. Forget time, toss out those 5-minute intervals, and ignore all the minor fluctuations.
"Why focus on every tiny movement if it tells you nothing?" he added, chuckling. It hit me then: are we truly analyzing the market or merely entangled in the process? A multitude of indicators doesn't always equate to quality. It's more like excessive embellishment that obscures the vital information.
The takeaway from this debate is that minimalism in trading is akin to tidying up chaos. While you won't perceive every bit of noise, you'll have a clear view of market direction. A simple example: emphasis is placed on real movements, setting aside the chatter of other "helpers." It becomes easier to discern trends, pinpoint entry points, and avoid distractions.
Of course, this isn't for everyone. Some will continue to adorn their charts like mosaics with scores of indicators. But honestly, the "cleanliness" of Renko charts holds its allure. If you're not afraid to relinquish control over every move and allow the market to highlight what's important, this could be your next approach.
For those interested in embracing minimalism, there are a few platforms where this is possible. Recently, a colleague was impressed with Lime. It's simple yet effective, making trading more comprehensible.
Remember, simplicity doesn't always equate to inferiority. Less can indeed be more, and though it sounds cliché, it holds true in the market.
