Don Dawson
Online Trading Academy
Often times I will be talking with a trader and hear a familiar story among new traders. “I’m making money one day then lose for 2 or 3 days.” I usually reply, “I bet you have married a market (only trade one market).” Usually I get a very surprised look and they reply, “Yes, but how did you know?”
As a professional trader you should be looking for one trading strategy that you will learn everything there is to know about it, a core strategy. Then execute it every trade that comes along. Too many strategies or ideas will only cloud your mind and cause hesitation when it comes time to execute your order, making you late for entry and usually getting stopped out for a loss.
This is where there can be a problem for a trader who only trades one market. Having a core strategy means you will have to wait for the exact setup to occur in your one market before you trade. Most novice traders do not realize they will need patience to wait for this next setup. Instead, they feel like this one core strategy will give them a trading setup every day in this one market. And it is possible that you can get a setup every day, but is the market going to come to that level to get your order filled every day? Probably not, no wait – I seriously doubt it!
During the trading session the novice trader will become board or anxious that they are missing opportunities and begin to surf the charts looking for something that resembles a reason to place a trade. The odds are this reason will have nothing to do with their trading plan. And you know what the results are of this trading style… a winner and 2 or 3 losing trades in a row.
But, if the novice trader would pick out a few core markets to trade, they will soon find that their core strategy will have them placing trades in markets that are possibly ready to move in their favor. Think of it like fishing with multiple fishing rods. You have a better chance of catching dinner if you have several lines in different places of the river.
Free Trading WorkshopYour core markets could be constructed of say 4 to 6 Futures markets, allowing you to fully understand all of the contract specifications and trading quirks of each of these markets. Now you can have your analysis done and patiently wait for price to come back to your level using your trading plan of a core strategy to execute the trade. You will find that this will increase your odds of having the market in one of the levels you wish to trade on a much more frequent basis.
Markets move in two types of directions, Impulse Waves and Corrections. The initial “impulse” wave is the path the market has the least resistance to travel. This is the direction we want to trade in. But to enter the market using our core strategy the price needs to “correct” the recent impulse move.
During the impulse wave the single market trader can make their money. But when it takes multiple time periods (days, hours, minutes, etc.) the individual market trader loses patience waiting for the proper setup before entering the market. Having core markets to trade will increase the frequency of core strategy setups. Each day different markets are either in an impulse wave or a correction of some sort.
Start small with a number of core markets, but have more than just one market to trade. I think you will find this way of trading will help you follow your trading plan rules much easier.
“The pain you feel today is the strength you feel tomorrow. For every challenge encountered there is opportunity for growth.”
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Editors’ Picks
EUR/USD remains offered below 1.1800, looks at US data
EUR/USD is still trading on the defensive in the latter part of Thursday’s session, while the US Dollar maintains its bid bias as investors now gear up for Friday’s key release of the PCE data, advanced Q4 GDP prints and flash PMIs.
GBP/USD bounces off monthly lows near 1.3430
GBP/USD is sliding in tandem with its risk-sensitive peers, drifting back towards the 1.3430 area, its lowest levels in the month. The move reflects a firmer Greenback, supported by another round of solid US data and a somewhat divided FOMC Minutes.
USD/JPY sticks to gains near one-week top, above 155.00 on softer Japanese CPI
USD/JPY attracts some dip-buying following the release of Japan's soft consumer inflation figures, which tempers bets for an immediate BoJ rate hike and weighs on the Japanese Yen amid fiscal concerns. Apart from this, a bullish US Dollar keeps spot prices close to over a one-week top. However, a slight deterioration in the global risk sentiment might cap gains. Traders now look to the US Q4 GDP report and the crucial PCE Price Index for cues about Fed policy outlook amid rising bets for more rate cuts, which will drive the US Dollar and provide a fresh impetus to the currency pair.
Editors’ Picks
AUD/USD hangs near two-week low vs. firmer USD ahead of key US macro releases
The AUD/USD pair meets with a fresh supply during the Asian session on Friday and remains well within striking distance of a nearly two-week low, touched the previous day. Spot prices currently trade around the 0.7035 area as traders look to the key US macro releases before placing fresh directional bets.
USD/JPY sticks to gains near one-week top, above 155.00 on softer Japanese CPI
USD/JPY attracts some dip-buying following the release of Japan's soft consumer inflation figures, which tempers bets for an immediate BoJ rate hike and weighs on the Japanese Yen amid fiscal concerns. Apart from this, a bullish US Dollar keeps spot prices close to over a one-week top. However, a slight deterioration in the global risk sentiment might cap gains. Traders now look to the US Q4 GDP report and the crucial PCE Price Index for cues about Fed policy outlook amid rising bets for more rate cuts, which will drive the US Dollar and provide a fresh impetus to the currency pair.
Gold drifts higher to near $5,000 on heightened US-Iran tensions
Gold price holds positive ground near $5,000 during the early Asian session on Friday. The precious metal edges higher as escalating tensions between the United States and Iran boost safe-haven demand. Traders brace for the preliminary reading of US Gross Domestic Product for the fourth quarter, the Personal Consumption Expenditures and the S&P Global Purchasing Managers Index data, which are due later on Friday.
Ethereum: Active addresses halt growth as US selling pressure eases
Ethereum network growth has declined after two months of explosive increase. US selling pressure has eased following an improvement in the Coinbase Premium Index. ETH extends its range-bound move below the $2,107 resistance and above $1,740 .
Hawkish Fed minutes and a market finding its footing
It was green across the board for US Stock market indexes at the close on Wednesday, with most S&P 500 names ending higher, adding 38 points (0.6%) to 6,881 overall. At the GICS sector level, energy led gains, followed by technology and consumer discretionary, while utilities and real estate posted the largest losses.
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