Tricks to winning the markets this year
“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.
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