The One Overlooked Tool That Can Instantly Improve Your Trading Decisions

Have you ever heard of chart mapping? 

No? Well it might be something that you should be interested in. 

You know over here we are into our fundamentals and macro news and trying to understand the narrative within the market.

Chart mapping can help traders audit market behaviour, reveal underlying sentiment, and sharpen your decision making. 

Being able to connect price action with the narrative driving the market can provide a key edge. 

Here are three tips to help you turn your charts into a map of market psychology. 

1. Anchor key events on to your chart 

One way I go about this is by adding little text flags on the day of any major news event, macro data releases, central bank announcements, geopolitical headlines, and many more. 

Here’s an example of how I have done it on Crude Oil. You can see that I have mapped on the chart each day that a market moving event has occurred, which tells me how the market reacted and how important it may have been. 

Look at the difference between supply and demand issues on the chart. When OPEC+ announced an increase in production after ‘liberation day’ the price fell. When the US President Trump paused trade tariffs the market rebounded. 

2. Track market expectations vs outcomes

You can also annotate the chart with forecasted vs actual outcomes of key data. This is harder to do with headlines, but for instance with a EUR/USD chart you could map US CPI, what happened, what was forecast and how the market reacted. 

This will help you understand if the data that is being released is leading to a rational move or an unexpected one. You may be surprised by the data that is driving the market at that particular time, and you can gear your ideas to those market moving events. 

3. Did the narrative stick?

This is the most important one to think about. Is the key event or headline driving the narrative behind the move, or is that narrative beginning to shift? If you can work this one out then you’re going to be just fine. 

Looking back at the oil example, we can see that oil prices dropped significantly after OPEC+ announced an increase in production on Friday 4th April. A separate headline April 23rd suggested OPEC+ would potentially increase output, leading to price falling. However, on May 5th when the news was set in stone that OPEC+ had agreed to increase production the price rose. You see the narrative was being built for over a month before that point, so when the news dropped the narrative didn’t stick because the news had been priced in by the market. 

Final Thoughts

Mapping key events on your charts can help you form a deeper understanding of markets, and the narrative that drives them. When you understand why price is moving, you’re better able to judge whether it’s likely to continue, fade, or do nothing. 

Patrick Reid, co-founder of Adamis Principle and a seasoned FX trader, is hosting a free masterclass titled “How to Trade US Macro with USD and Risk Assets” on Thursday, May 29th at 2 PM UK time. Drawing from over 15 years of experience, including tenure at Europe’s largest proprietary trading desk, Patrick aims to demystify the complexities of US macro trading. 

What You’ll Learn:

• Data Impact Analysis: Understand the relative influence of soft versus hard data, and Tier 1 versus Tier 2 data releases on market movements. 

• USD Positioning: Discover why positioning in the US dollar is crucial and how it affects trading strategies. 

• Algorithmic Trading Insights: Learn techniques to navigate and capitalize on markets dominated by high-speed algorithms, including the concept of ‘fading the move’.

• Reaction Function Recording: Grasp the importance of documenting market reactions to various data points to enhance your trading toolkit. 

• Exclusive Mapping Function: Gain access to Patrick’s proprietary mapping function, designed to provide a structured approach to trading decisions. 

This session is tailored for FX traders, macro analysts seeking actionable insights, and portfolio managers aiming to refine their approach to US macroeconomic events. Patrick’s mentorship has benefited professionals from institutions like Goldman Sachs, JP Morgan, and Credit Suisse. 

So don’t miss out on this opportunity, it could be the missing puzzle to supercharge the rest of your trading year! 

Speak soon!