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 stays well offered below 1.1800
The selling pressure on EUR/USD is picking up pace, with the pair slipping decisively below the key 1.1800 level and sliding to fresh two week lows as Wednesday’s session draws to a close. The move lower comes as the US Dollar finds renewed strength after the latest round of US data and the release of the FOMC Minutes. Next of note on the docket will be the US weekly Initial Jobless Claims.
GBP/USD reaches multi-day lows near 1.3500
GBP/USD reverses its initial upside momentum and is now adding to previous declines, approaching the 1.3500 region on Wednesday. Cable’s downtick comes on the back of decent gains in the Greenback and easing UK inflation figures, which seem to have reinforced the case for a BoE rate cut in March.
USD/JPY holds gains near 154.00 ahead of the Fed’s minutes
USD/JPY retraces Tuesday's losses and returns near weekly highs in the area of 154.00. The US Dollar trims losses in quiet markets with all eyes on the Fed's minutes. Weak Japanese GDP data resurfaced concerns about Japan's fiscal stability and halted JPY's recovery.
Editors’ Picks
AUD/USD: Further weakness could retest 0.7000
AUD/USD resumes its decline, leaving behind two daily gains in a row and approaching the area of multi-day lows in the 0.7040-0.7030 band ahead of the opening bell in Asia. Moving forward, the Aussie is expected to remain under scrutiny in light of the publication of the jobs report in Australia.
EUR/USD stays well offered below 1.1800
The selling pressure on EUR/USD is picking up pace, with the pair slipping decisively below the key 1.1800 level and sliding to fresh two week lows as Wednesday’s session draws to a close. The move lower comes as the US Dollar finds renewed strength after the latest round of US data and the release of the FOMC Minutes. Next of note on the docket will be the US weekly Initial Jobless Claims.
Gold battle to regain $5,000 continues
Gold is back on the front foot on Wednesday, shaking off part of the early week softness and challenging two-day highs near the $5,000 mark per troy ounce. The move comes ahead of the FOMC Minutes and is unfolding despite an intense rebound in the US Dollar.
Australia unemployment rate set to edge up within overall strong labor market
The Australian monthly employment report is scheduled for release on Thursday at 00:30 GMT, and market participants anticipate a modest increase in jobs in January. The Australian Bureau of Statistics is expected to announce that the country added 20K new jobs in the month, while the Unemployment Rate is forecast at 4.2%, up from the 4.1% posted in December.
Mixed UK inflation data no gamechanger for the Bank of England
Food inflation plunged in January, but service sector price pressure is proving stickier. We continue to expect Bank of England rate cuts in March and June. The latest UK inflation read is a mixed bag for the Bank of England, but we doubt it drastically changes the odds of a March rate cut.
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