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.”
This content is intended to provide educational information only. This information should not be construed as individual or customized legal, tax, financial or investment services. As each individual's situation is unique, a qualified professional should be consulted before making legal, tax, financial and investment decisions. The educational information provided in this article does not comprise any course or a part of any course that may be used as an educational credit for any certification purpose and will not prepare any User to be accredited for any licenses in any industry and will not prepare any User to get a job. Reproduced by permission from OTAcademy.com click here for Terms of Use: https://www.otacademy.com/about/terms
Editors’ Picks
EUR/USD hits two-day highs near 1.1820
EUR/USD picks up pace and reaches two-day tops around 1.1820 at the end of the week. The pair’s move higher comes on the back of renewed weakness in the US Dollar amid growing talk that the Fed could deliver an interest rate cut as early as March. On the docket, the flash US Consumer Sentiment improves to 57.3 in February.
GBP/USD reclaims 1.3600 and above
GBP/USD reverses two straight days of losses, surpassing the key 1.3600 yardstick on Friday. Cable’s rebound comes as the Greenback slips away from two-week highs in response to some profit-taking mood and speculation of Fed rate cuts. In addition, hawkish comments from the BoE’s Pill are also collaborating with the quid’s improvement.
USD/JPY drops back below 157.00, as focus shifts to Japan snap election
USD/JPY is back in the red below 157.00 in the Asian session on Friday. The Japanese Yen recovers ground against the US Dollar amid some profit-taking ahead of Japan's snap general election on Sunday. The preliminary reading of the Michigan Consumer Sentiment Index report for February will be released later on Friday.
Editors’ Picks
EUR/USD: US Dollar to remain pressured until uncertainty fog dissipates Premium
The EUR/USD pair lost additional ground in the first week of February, settling at around 1.1820. The reversal lost momentum after the pair peaked at 1.2082 in January, its highest since mid-2021.
Gold: Volatility persists in commodity space Premium
After losing more than 8% to end the previous week, Gold (XAU/USD) remained under heavy selling pressure on Monday and dropped toward $4,400. Although XAU/USD staged a decisive rebound afterward, it failed to stabilize above $5,000.
GBP/USD: Pound Sterling tests key support ahead of a big week Premium
The Pound Sterling (GBP) changed course against the US Dollar (USD), with GBP/USD giving up nearly 200 pips in a dramatic correction.
Bitcoin: The worst may be behind us
Bitcoin (BTC) price recovers slightly, trading at $65,000 at the time of writing on Friday, after reaching a low of $60,000 during the early Asian trading session. The Crypto King remained under pressure so far this week, posting three consecutive weeks of losses exceeding 30%.
Three scenarios for Japanese Yen ahead of snap election Premium
The latest polls point to a dominant win for the ruling bloc at the upcoming Japanese snap election. The larger Sanae Takaichi’s mandate, the more investors fear faster implementation of tax cuts and spending plans.
RECOMMENDED LESSONS
Making money in forex is easy if you know how the bankers trade!
I’m often mystified in my educational forex articles why so many traders struggle to make consistent money out of forex trading. The answer has more to do with what they don’t know than what they do know. After working in investment banks for 20 years many of which were as a Chief trader its second knowledge how to extract cash out of the market.
5 Forex News Events You Need To Know
In the fast moving world of currency markets where huge moves can seemingly come from nowhere, it is extremely important for new traders to learn about the various economic indicators and forex news events and releases that shape the markets. Indeed, quickly getting a handle on which data to look out for, what it means, and how to trade it can see new traders quickly become far more profitable and sets up the road to long term success.
Top 10 Chart Patterns Every Trader Should Know
Chart patterns are one of the most effective trading tools for a trader. They are pure price-action, and form on the basis of underlying buying and selling pressure. Chart patterns have a proven track-record, and traders use them to identify continuation or reversal signals, to open positions and identify price targets.
7 Ways to Avoid Forex Scams
The forex industry is recently seeing more and more scams. Here are 7 ways to avoid losing your money in such scams: Forex scams are becoming frequent. Michael Greenberg reports on luxurious expenses, including a submarine bought from the money taken from forex traders. Here’s another report of a forex fraud. So, how can we avoid falling in such forex scams?
What Are the 10 Fatal Mistakes Traders Make
Trading is exciting. Trading is hard. Trading is extremely hard. Some say that it takes more than 10,000 hours to master. Others believe that trading is the way to quick riches. They might be both wrong. What is important to know that no matter how experienced you are, mistakes will be part of the trading process.
The challenge: Timing the market and trader psychology
Successful trading often comes down to timing – entering and exiting trades at the right moments. Yet timing the market is notoriously difficult, largely because human psychology can derail even the best plans. Two powerful emotions in particular – fear and greed – tend to drive trading decisions off course.