“Trading is one of the
oldest concepts on the planet and that’s an advantage to your new business. You
don’t have to reinvent the wheel. What you have to do now is create a written
set of instructions to your brain. Instructions that will turn your concepts
into cash. Think of your business plan as Cliff Notes on “How to make money by
trading!” because that’s what it will be once it is completed. Since only the
best traders have the discipline to make such a plan, you’ll have one of the
“edges” you need to compete alongside the top market makers and traders.” – Dr. Van Tharp (Source:
Vantharp.com)
Based on
many years of trading and research in the markets, I’d like to share some
tricks with you. I hope the tricks would help you become triumphant as a
trader.
NEITHER A
PERMABULL NOR A PERMABEAR BE
In Forex
markets, it’s far better to be a trader rather than be an investor. It’s more
preferable to make money when there is a strong uptrend or a strong downtrend.
When an investor is experiencing drawdowns, a trader who’s good at timing
entries would be raking in profits.
When a
permabear is being pummeled in a market that suddenly becomes bullish, going
protractedly northward, a trader that has a good system, who is good at timing entries would be raking in
profits.
A trader
goes long in a bull market and goes short in a bear market, truncating their
negativity when caught in a wrong direction. On the other hand, an investor
makes money only in a bull market.
In the
modern markets, it makes more sense to be a trader, not a permabull nor a
permabear.
Go short
in bear markets and go long in a bull markets. Don’t buy and hold because a
bear market can hold out longer than your portfolio may carry it. You can receive
margin calls in the process. Strong pullbacks on Bitcoin is a good example.
FIND THE
MARKET THAT’S MOST SUITABLE FOR YOUR STRATEGY
For
example, a strategy that follows the trend would work well in a market that
trends very well like, USDCNH, Bitcoin, Gold, Silver and other currencies that
trend very well. It doesn’t mean that these trading instruments don’t
experience consolidations, but it means they tend to trend more than other
instruments like USDJPY and EURCHF. When you use a trend-following strategy on
an instrument that tends to trend well, your results will improve.
There are
also better results when a trend follower trades on an instrument which tends
to move fast.
When you
scalp, you would do well on trading instrument that moves slowly or tends to
consolidate, just like EURCHF and EURGBP.
When you’re
scalping in a highly trending market, your results can be worsened.
FIND THE
RIGHT ENVIRONMENT FOR YOUR SYSTEMS
Locate the
right environment for your trading system. Some trading systems perform well on
Tuesdays to Thursdays only. Some perform well on Mondays and Fridays only. Some
systems perform well from October to April only, while some systems perform
well on May to September only. Some perform well during Asia sessions.
Please
find the best months or weeks or days or times for your strategies. Find the
best market conditions for your strategies and try to avoid periods and
conditions that may not be favorable to you.
Conclusion:
Please don’t
forget to use stops and risk very small per trade. Those who think they’re
smart enough to avoid stop and low lot sizes, will eventually learn bitter
lessons, no matter how good their strategies are.
I end this
article with 3 quotes from great traders:
“Staying on the right
side of the market is not always easy. But when it is, keep riding the easy
move up while having a plan in place to protect your capital when the
inevitable big pullback comes.” - D.R. Barton, Jr
“The markets don’t
always cooperate with you. The winning trader is the person who questions a
trading plan before executing it. He or she tries to anticipate what could go
wrong, and thinks of ways to work around these potential setbacks. Being a
healthy skeptic can be difficult at times, but the cautious optimist usually
ends up making the most profits in the end.” – Joe Ross
“A losing trader can
do little to transform himself into a winning trader. A losing trader is not
going to want to transform himself. That’s the kind of thing winning traders
do.” - Ed Seykota
Market Analyst, Trading Signals Provider and Coach