How do YOU trade? | Metals Mine

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How do YOU trade?

  • #1
  • First Post: Jun 14, 2019 10:27am Jun 14, 2019 10:27am
Hello friends, I decided to start this thread to see if I could generate discussion about a belief I have always had. Simply put it is this: Markets are Markets, and Trading is Trading. I firmly believe that ALL markets function pretty much the same way, and that is that people who wish to participate MUST do so by placing orders (be they buy or sell, market or limit, etc.)

However participants which to "engage" with the markets via charts/graphs, fundamental and news research, advise from their cats, in the end they must all enter orders. This applies as well to those who purchase physical gold. While it take a while for this order to work its way through the markets, the physical buyers result in higher actual demand, which results in higher prices, which in turn triggers production and supply, which then creates movements (because of these physical orders).

My feeling is that a thorough and rigorous evaluation of the order flow/volume on a daily basis, can bring about opportunities to profit several times in any given trading window. I have proved this (to myself) over and over again in any market I trade. (Futures, FX, Commodies, metals...) So my question is this:

Do any of you trade DIFFERENTLY from one market to the next?


In other words, do you trade FX in a different way than you trade metals, or futures? Other than time frames, and scalping vs swing trading vs position...does your methodology change from one market to the next? And if so, why?
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  • #2
  • Jun 14, 2019 10:41am Jun 14, 2019 10:41am
Again, I will restate...I trade on a discretionary basis, using my interpretation of the reaction of price to order flow/volume data. This works on any and all time frames and any and all markets (in my experience).

Simply put this works because this is HOW markets function. The processing and filling of orders across, either centralized or even decentralized markets venues. It works the same way in your local grocery store or farmer's market, as it does on NYSE or CBOE. For every buyer there MUST be a seller with equal or greater volume. Every buyer and seller must be matched on price and remaining volume (be buy or sell) creates "pressure" to transact forcing prices up or down to complete the transaction.

The market is always seeking a ZERO balance of orders. In other words, if all buyers and sellers are satisfied, price will not move up or down.

Most trading (with the possible exception of stocks) are zero sum trading. Meaning an "equal value" is always exchanged in every transaction. Those who loose transfer their funds to those who win. But in the end, the same money that went into the market come back out again at the end of every day in a process known as "settlement" or "clearing".

Using these structural components of market function I have been able to reap great benefits and reduce losses based on using the market to interpret itself. For more details just ask.

But I am more interested in understanding how YOU trade...are you a technical analyst?, fundamental analyst?, "cowboy"? (shooting from the hip). Lets start a conversation.
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  • #3
  • Jun 14, 2019 1:52pm Jun 14, 2019 1:52pm
I have two methodologies: US Equities and everything else.

Equities
I treat equities different because I've found a lot more useful indicators for them. For example, the Advance Decline line works well for spotting tops, but isn't available for any other asset class with the one exception of corp debt. My strategy is longer term, but not buy and hold. I adjust risk based on what my indicators (mostly fundamental) are telling me. Since this is a metals site I won't get further into detail, but I have a lot of confidence in this strategy and I have most of my assets allocated to it.


Everything else
My 'everything else' strategy combines a core macro thesis with momentum. Here's the rough approach:

  1. Create a macro thesis.
  2. Check if price action is supportive. (If bullish, must be in an uptrend.)
  3. Estimate Risk to Reward (must be 1:3 or better)
  4. Attempt to disprove macro thesis. (Failure to disprove is stronger than trying to prove you're correct.)
  5. Define point at which I'm wrong based on:
    a.) fundamental developments
    b.) price
  6. Determine account risk % based on trade confidence (max 2%, usually 0.5%)
  7. Determine SL based on step 4, part b.
  8. Determine position size. (Position = (Allocated Risk % / Loss on Trade %) * Account Equity / Expected Entry Price)
  9. Buy/Sell (entering in SL at same time)
  10. Adjust SL so R:R is never >1. I usually exit with a trailing stop.


That's the gist of it. I enter these trades with the expectation that they'll take 3-12 months to play out, but in reality it usually happens quicker than I expect. I trade options too and the process deviates a little from the above.

Self-sufficiency is the greatest of all wealth. - Epicurus
  • #4
  • Jun 14, 2019 5:32pm Jun 14, 2019 5:32pm
Quoting Ef5
...I enter these trades with the expectation that they'll take 3-12 months to play out, but in reality it usually happens quicker than I expect. I trade options too and the process deviates a little from the above.
Is it fair to say then, that you trade based on fundamental analysis in all markets, even though your process is slightly different on Equities due to some available studies that are not available (by their very nature) in other markets.

For instance, there can me no "advance vs decline" reading on any commodity or a currency. But if I read your post correctly it sounds to me that the basis of your analysis and evaluation of any market is based on its fundamental "thesis". I would also speculate that your macro analysis of equities is similarly based? You don't mention it but your profile states you are in the US, so I might wonder if you "live" your macro thesis for equities every day...

I too vary my strategy from one market to the next and like you I tend to hold certain positions longer...not nearly as long as you do however. But in Futures I'm in and out 3-5 times in a single session...unless I get my goal on the first trade (I love those days!!). FX trading and Commodities I tend to hold for a few weeks to a couple of months. (depending on the swap). But find I am limited out or stopped out be then. While the execution is slightly different, the goal is the same. Entries with the least amount of exposure, based on order flow/volume, and targets that are reasonable and achievable. While I love those 1000 pt trades, I have never really held a position long enough to see if I can get it. Case in point Gold today...stopped out at 700 pts. (690 pts.) due to broker stupidity.
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  • #5
  • Jun 16, 2019 12:20am Jun 16, 2019 12:20am
Quoting DonPato
{quote} Is it fair to say then, that you trade based on fundamental analysis in all markets, even though your process is slightly different on Equities due to some available studies that are not available (by their very nature) in other markets. For instance, there can me no "advance vs decline" reading on any commodity or a currency. But if I read your post correctly it sounds to me that the basis of your analysis and evaluation of any market is based on its fundamental "thesis". I would also speculate that your macro analysis of equities is similarly...
My equities strategy is different at it's core. I'm long or short depending on where we're at in the business cycle. If we have pullback like we did in December 2018 I increase risk through buying instruments like UPRO. When there are warning signs of a short-term top I'll derisk, sell calls, etc.. This has worked very well overall, but it hasn't been without some peril. I put on a big XIV position 20 minutes before the close on Feb 5th, 2018 then promptly watch it drop 85% in the next 30 minutes.

Quoting DonPato
I too vary my strategy from one market to the next and like you I tend to hold certain positions longer...not nearly as long as you do however. But in Futures I'm in and out 3-5 times in a single session...unless I get my goal on the first trade (I love those days!!). FX trading and Commodities I tend to hold for a few weeks to a couple of months. (depending on the swap). But find I am limited out or stopped out be then. While the execution is slightly different, the goal is the same. Entries with the least amount of exposure, based on order flow/volume,...
I applaud your success at short term trading. I tried day trading full time when I was 18 and again at 21, but wasn't profitable. In hindsight there were a lot of things I was doing wrong. Even now, after many years of experience in the markets, I don't know if I'd really have an edge short term.
Self-sufficiency is the greatest of all wealth. - Epicurus
  • #6
  • Jun 16, 2019 9:28am Jun 16, 2019 9:28am
Quoting Ef5
My equities strategy is different at it's core. I'm long or short depending on where we're at in the business cycle. If we have pullback like we did in December 2018 I increase risk through buying instruments like UPRO. When there are warning signs of a short-term top I'll derisk, sell calls, etc.. This has worked very well overall, but it hasn't been without some peril. I put on a big XIV position 20 minutes before the close on Feb 5th, 2018 then promptly watch it drop 85% in the next 30 minutes...
I doff my cap to YOU sir, your methodology (at least the concept of it expressed here) is what I aspired to do while I was "gainfully employed". I wanted to do this kind of trading and "beat" the market so as to increase the miserable rate my savings paid. This is what got me into trading. I quickly learned that I was easily confused by conflicting reports and opinion of "experts" who were really paid just to express opinions regardless of whether or not they were accurate. I found the weather reporter was more accurate.

That is when I moved to a more technical based decision making process, which, as you can imagine, didn't fare well either. It wasn't until I learned and truly understood market structure and order flow/volume that I started to be more consistently on the winning side of things.

To this day I have never understood (nor do I care to anymore) the time element in options and still to this day consider it more of a gamble than a calculated risk especially since the market really doesn't care to much about the "time decay" of anyone's individual investment position.

Most of my experiences were what you expressed on your XIV position. I was pummeled by everyone telling me, "you can't time the market..." After many years of banging my head against the wall...I'm here to say, "Oh yes you can..."
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  • #7
  • Jun 16, 2019 11:43pm Jun 16, 2019 11:43pm
Quoting DonPato
{quote} I doff my cap to YOU sir, your methodology (at least the concept of it expressed here) is what I aspired to do while I was "gainfully employed".
Thanks Don!

Quoting DonPato
To this day I have never understood (nor do I care to anymore) the time element in options and still to this day consider it more of a gamble than a calculated risk especially since the market really doesn't care to much about the "time decay" of anyone's individual investment position.
Yep, there's an added degree of difficulty with options. I've been in a number of situations where my underlying thesis was correct, but I still lost money with options. A lot of people sell indiscriminately and manage to make a career out of it, but that's not a game I want to get into. I just use options to structure a bet differently.

Quoting DonPato
I was pummeled by everyone telling me, "you can't time the market..." After many years of banging my head against the wall...I'm here to say, "Oh yes you can..."
Absolutely! I'm glad you found a methodology that works well for you. I haven't experimented much with order flow/volume and I'm fascinated by your approach. I'll be reviewing your market analysis with great interest.
Self-sufficiency is the greatest of all wealth. - Epicurus
  • #8
  • Jun 17, 2019 10:28am Jun 17, 2019 10:28am
Quoting Ef5
...Absolutely! I'm glad you found a methodology that works well for you. I haven't experimented much with order flow/volume and I'm fascinated by your approach. I'll be reviewing your market analysis with great interest.
I'm happy to share with anyone who will listen...I am flattered that you would consider looking at it. I will begin posting some trades (metals of course) using my methodology, however, neither Gold nor Silver (at this point is of interest to me. Both are at the stop of well established ranges and I'm not seeing anything that would lead me to believe that price might rise up (or break out) of those ranges, or even that price will fall back toward the bottom. Not yet anyway. I'm seeing mostly "disinterest", which in an of it self may be bearish on price, but I'll have to wait and see what today's order flow looks like.
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  • #9
  • Jun 17, 2019 1:27pm Jun 17, 2019 1:27pm
I think that is is good to trade by fundamentals, risk management, gut, liquidity/spread levels etc... And overall market feeling... or how do they say in BIllions TV show... "do you see the market?".... And also... after creating the PLAN... (semi)automate the trades when possible to put emotions of out the equation.. so to TRADE the plan... and avoiding chasing the loses, "rounding up" balance, return or similar games (just one more pip) etc
Can you afford to take that chance?
  • #10
  • Jun 18, 2019 9:28am Jun 18, 2019 9:28am
Quoting auricforecas
... "do you see the market?"....
This comment rings very true. After a VERY long time and now with the use of some "visual aids" I DO see the market. And that is by way of order flow/volume. You can't have one without the other...price is simply the consequence of that dynamic.

Quoting auricforecas
...And also... after creating the PLAN... (semi)automate the trades when possible to put emotions of out the equation...
I found that when one "truly" sees the market the emotional aspect is of very little consequence. At least this is true for me, again after a very long battle with my frustrations. Once you learn to recognize price "exhaustion" the decisions become so obvious that to you ignore them at your own peril. Example: If you are holding a long position and see that price just can't go any farther...regardless of profit or loss why wouldn't you close that position? I makes no sense to hold it any longer.

I tried to automate my trading decisions at one point, which required I learn to code. For me it was NOT pretty. I found that "teaching" a computer to think is far more difficult than just thinking for myself. Again, here your market/order flow/volume sight is what makes the difference. I still believe I make my own best decisions, based on the information at the moment of that decision.

I compare this to an autonomous car. While its idea is unique, teaching AI to do the same thing as a human brain can do in a fraction of a second is (IMHO) not possible. Sure, AI can come frighteningly close, but it is NOT the same. There is a reason it is called, "Artificial" Intelligence. Automating vehicles takes out all the joy of driving...just like automating my methodology would take out all the satisfaction of trading.

Sure (just like in driving) you have to deal with "heavy traffic" and rude drivers (brokers) and people who just shouldn't be on the road, (trading). However once you start your own driving the "freedom" it heralds is almost intoxicating.
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  • #11
  • Jun 18, 2019 5:44pm Jun 18, 2019 5:44pm
Quoting DonPato
{quote} tried to automate my trading decisions at one point, which required I learn to code. For me it was NOT pretty. I found that "teaching" a computer to think is far more difficult than just thinking for myself. Again, here your market/order flow/volume sight is what makes the difference. I still believe I make my own best decisions, based on the information at the moment of that decision. I compare this to an autonomous car. While its idea is unique, teaching AI to do the same thing as a human brain can do in a fraction of a second is (IMHO)...
Yeah, I was thinking more like programming the EA to TRADE your plan, not necessarily to do any "thinking". But, depends on your strategy, pre-enter certain trade conditions etc.. For example, even setting TP/SL levels or MarketOrders is somewhat of (semi) automation... I for example model the market and pre-set certain trades at certain conditions (apart from the opportunistic live/event ones).. according to the model output... It really helps sometimes.. It is very tempting to CLOSE the trade when it builds up in a negative (for a moment - that you do not know at the time that it is just that). For example if you overwatch the market it can (will) exhaust you but you might also exit the trade/market too quickly.. I think it is even WORSE sometimes.. to pull-out too quickly and see 20-50+ PIPs "lost" just seconds/minutes after.. But yeah, the question is if it is better to take FULL CONTROL, manual... I think that would be IDEAL, however it comes at the prices.. I'm still struggling with balance of this. It is not the same, of course, the sweet spot is having both in balance...
Can you afford to take that chance?
  • #12
  • Jun 20, 2019 6:57pm Jun 20, 2019 6:57pm
Thanks for starting this thread Don!

I usually try to follow three general trading methods depending on my sentiment conviction and desired time-frame. I won't get into how I develop my sentiment or how I identify the exact timing of my trades here. I will keep this post high level concerning my strategy when trading certain time-frames:

1) Long-term (3 months+)
This is where I focus everything on the fundamentals, scale into positions and set my time-frame target up front to avoid closing out too early and leaving additional profit on the table. Long term is the time frame that I have had the most success so it is naturally where I allow the largest investment. Many times my trades are locked in for so long that they are more investing than trading but whats in a name?

2) Medium-term (1 -14 days)
For medium term trades I only follow my long term sentiment for direction but try to jump in and out of the market at opportune times. For example, I am bullish on gold right now so when economic data is approaching I may decide to enter or exit a trade. I also will consider support and resistance zones to try to enhance the return I can get on where I think the market is ultimately going. For medium-term trades I set TPs and SLs but will manually close trades that are near my TP if I am worried it won't quite hit. EUR/USD is another example of an instrument that was just in a strong downtrend starting early February. After identifying that trend in by late March odds are you can bag pips here and there following the trend in medium time-frames until the trend stops and you won't have to risk much capital.

3) Short-term (1 - 60 mins)
I also find it fun to trade events and strong trends. When big news or events hit the markets or when there is high velocity in price movement for any reason I can usually ride the wave for just a bit and catch the middle of the move. Here you have to be careful not to try to front run the move or wait too long to commit to it, just catch the middle of it. This style is the most risky and you have to avoid any urge to get greedy but it's fun every once in awhile. Obviously much of this short term trading should only be done with highly liquid products though such as EUR/USD and to a lesser extent XAU/USD. For short term trading I always have a SL but I usually set it much wider than I think it could hit. This allows me to essentially manage the trade manually without allowing huge exposure to black swan events.
careful not to step in a pile of it
  • #13
  • Jun 22, 2019 11:43pm Jun 22, 2019 11:43pm
Quoting bulltrap
When big news or events hit the markets or when there is high velocity in price movement for any reason I can usually ride the wave for just a bit and catch the middle of the move. Here you have to be careful not to try to front run the move or wait too long to commit to it, just catch the middle of it. This style is the most risky and you have to avoid any urge to get greedy but it's fun every once in awhile. Obviously much of this short term trading should only be done with highly liquid products though such as EUR/USD and to a lesser extent XAU/USD....
This is the one thing I've found that works short-term. The price always reacts immediately when new information comes into the market and generally that's not a battle I think I can win. However, sometimes the news is so big it causes an investment paradigm shift and everyone wants to reposition. When this happens you'll get a post news drift that can last a few hours. These occurrences are rare, but you can make good money when it happens.
Self-sufficiency is the greatest of all wealth. - Epicurus
  • #14
  • Jun 23, 2019 8:28am Jun 23, 2019 8:28am
Quoting Ef5
{quote} This is the one thing I've found that works short-term. The price always reacts immediately when new information comes into the market and generally that's not a battle I think I can win. However, sometimes the news is so big it causes an investment paradigm shift and everyone wants to reposition. When this happens you'll get a post news drift that can last a few hours. These occurrences are rare, but you can make good money when it happens.
Good point and I think I know what you are talking about. News like this is usually about something so far off the radar.

An example I can think of where I made some money trading that type of news is when China announced that they were banning coal imports from Australia.
careful not to step in a pile of it
  • #15
  • Jun 23, 2019 10:56am Jun 23, 2019 10:56am
Quoting bulltrap
Thanks for starting this thread Don! I usually try to follow three general trading methods depending on my sentiment conviction and desired time-frame. ...
Thank you for your contribution...I find this very interesting but I am wondering...do you use a different methodology or approach for each of your different time frames? Or do you decide to hold longer if a smaller time frame trade "looks like it has legs"? I as this with a selfish reason in mind, let me explain.

When I started trading my idea (as I expressed earlier here) I wanted to be able to "trend trade" or hold for long periods of time thinking that this required less time in front of the computer and allowed me to carry another "job" to pay the bills. I found that the "transition" from one holding period to another was extremely difficult for me to execute. I ended up either moving a stop too soon and getting the "FU stop" or waiting too long and watching a fairly good profit deteriorate into a disappointing loss.

This eventually lead me to trade smaller and smaller time frames and leave the "trend following" aside. I did this after about 3 years of careful study on ALL the markets I trade collecting data from every source I could get my hands on. I found that while these long term trends do occur...they only do so only once or twice every year. Most of the rest of the time the market is ranging (in one form or another) on the longer term time frames. This lead me to the mentality of simplifying my trading by taking profits at (what I discovered) was my optimal win/loss ratio. 2.6-2.8 x R. And in my futures trading I use this exclusively. It is an "in-make your goal-out" mentality. I have not found a good reason to expose myself to any further risk once my daily/weekly/monthly goal has been achieved.

I now carry this "mentality" to longer term trading. Even though I trade daily and above charts on FX and Metals, I have still found that this idea of "in-make your goal-out" has served me well, BUT, I have never held a position for much longer than 8-10 weeks. I think I still have a USD/MXN short from 2017 but that is only a demo trade (experimentation).

So after a long winded explanation my question is this: Do you use a DIFFERENT approach or method to trade long/medium/short term? Or is it the same approach applied to different time charts? OR is it a same approach on the same charts but "transitioned" to longer and longer time frames as the trade progresses...if so HOW (if you care to explain) do you accomplish your transition...I hope to learn something here.
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  • #16
  • Jun 24, 2019 12:04pm Jun 24, 2019 12:04pm
Quoting DonPato
Or do you decide to hold longer if a smaller time frame trade "looks like it has legs"?
Rather than holding a short-term or medium-term position longer I can always open another trade in the same direction with an account/instrument that I prefer for that holding period.

Right now I am long gold both in the medium and long term so I am accumulating gold ETFs, stock in certain mining companies and physical gold. An example of how a trade could progress would be if I am bullish on gold for a specific short-term reason I could open a CFD trade, realize that there is going to be a break in a resistance level and then open an ETF long position for medium term as well. I'd then close the CFD trade on schedule and let the ETF run longer. I don't usually trade CFDs but this is just an example to illustrate a trade progression.

Quoting DonPato
{quote} Thank you for your contribution...I find this very interesting but I am wondering...do you use a different methodology or approach for each of your different time frames?
I do have a different methodology for each set of trading time-frames.

My long term approach is based almost completely on fundamentals and a checklist of sorts for under/over valuation. Each list is slightly different depending on which asset is being traded. In the long term I am much more open to risk being placed in the account and I manage my positions accordingly. The most important thing here is getting the direction correct so formulating a market opinion is where I spend all my time/analysis.

My medium term approach involves the most technical analysis of the three, although I am still skeptical of technical trading. When I trade medium term I have to be very thoughtful of my TP/SL because this time-frame is where timing matters the most. If I already have a market sentiment developed for long term trading sometimes it can translate to my medium term trades as well and all I will need to do is get the timing and levels correct, hence the focus on technicals.

My short term approach can be based on all sorts of things and sometimes ends up being more of a gamble than anything else. I don't frequently trade short-term but it can be fun and educational if I keep my risk in check. I'll trade events, candle formations, support/resistance breakouts/fakeouts and the main time I spend here is in the post trade learning. I like to "feel markets out" sometimes and see how an asset reacts to good or bad news. This can contribute to my long term sentiment development. I also like to play with price levels and candle formations which can contribute to my experience when determining my medium term trades.
careful not to step in a pile of it
  • #17
  • Jun 24, 2019 12:11pm Jun 24, 2019 12:11pm
Quoting DonPato
I wanted to be able to "trend trade" or hold for long periods of time thinking that this required less time in front of the computer and allowed me to carry another "job" to pay the bills. I found that the "transition" from one holding period to another was extremely difficult for me to execute.
I 100% agree here. That is why I see such a big difference in performance between my trading strategies as well. I have spent a lot more time in the long term arena mainly because of the time restriction you mention.

Quoting DonPato
So after a long winded explanation my question is this: Do you use a DIFFERENT approach or method to trade long/medium/short term? Or is it the same approach applied to different time charts? OR is it a same approach on the same charts but "transitioned" to longer and longer time frames as the trade progresses...if so HOW (if you care to explain) do you accomplish your transition...I hope to learn something here.
After a long winded answer

The trading strategies are definitely different. Short term trading for me is almost always to contribute some sort of knowledge to the other two longer time periods or to have fun and try to make a small profit. I am more of a hands on learner so I think actually doing something vs watching really helps me personally.

The MT and LT are different strategies as well but overlap in certain areas like a venn diagram. I don't really see it as a transition, I see it more like some of the work is duplicate when placing the same exact trade on both time frames.

I'll also say take this with a grain of salt because it seems like you have some pretty advanced trading techniques and I could learn a lot from your style as well. You definitely have more technical skills that I do!
careful not to step in a pile of it
  • #18
  • Jun 24, 2019 12:37pm Jun 24, 2019 12:37pm
Quoting bulltrap
Short term trading for me is almost always to contribute some sort of knowledge to the other two longer time periods or to have fun and try to make a small profit....
I once had a trainer who told me that if I was unsure about a signal to "send in a foot solder" to test the market. He meant that I might try to open a small position with a very small risk exposure to see if the signal (or trading theory) would work out. This sounds like something very similar.

Quoting bulltrap
...I am more of a hands on learner so I think actually doing something vs watching really helps me personally. The MT and LT are different strategies as well but overlap in certain areas like a venn diagram. I don't really see it as a transition, I see it more like some of the work is duplicate when placing the same exact trade on both time frames...
I think this encompasses the difference in our trading styles. If I have a position on I tend to watch that position from the point of view of "giving it every chance to succeed". Thus my objectivity to learn is compromised while I am in the trade. I recognize this as a major trading issue for me and take steps to balance this tendency...thus "rules" about take profits and stops. I have no issue with saying my premise was wrong, but while in the trade my objectivity is "unreliable" at best. You point out something I must still work on myself.

Quoting bulltrap
... I'll also say take this with a grain of salt because it seems like you have some pretty advanced trading techniques and I could learn a lot from your style as well. You definitely have more technical skills that I do!
Thank you for the compliment. I appreciate that!!

Thank you for a well thought out and cogent response...I now have much to think over...Ah trading!!
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  • #19
  • Jun 24, 2019 3:09pm Jun 24, 2019 3:09pm
Most traders are pulling the trades out of.... somewhere (at least partly)
You can not become a good trader (unless you are a wizard or/and have fix on the game) if you are not aware of this simple fact(s)...
Inserted Video


Because if there would a be a SLIGHTEST "knowing"... you would need only 20trades from ZERO to HERO.

From BROKE to BILLIONAIRE or from BUST to BILLIONS

100USD in... 20x TP30 trades after... at 500:1, 10% stop... =BILLIONs out
proof: https://www.wolframalpha.com/input/?i=100*2.33%5E20

Therefore every trade has a unknowing/gambling/uncertainty component...
And we are adding up this "interventions"... they can save us tomorrow or f... us the day after...
Can you afford to take that chance?
  • #20
  • Jun 24, 2019 4:45pm Jun 24, 2019 4:45pm
Most of my trading is based on fundamental analysis. I try to stay out of the market unless I see a clear opportunity. For example, the market has been selling off the US dollar on expectations that the fed is going to cut rates by more than 25 basis points during the July meeting. So I'll be watching Powell's speech tomorrow. If he indicates that the Fed is still holding steady or says anything that would trigger the market to reverse their bets on anything more than the 25 basis point cut, there will be some opportunity tomorrow in a pretty big move. Gold could come off these highs while the USD appreciates. I'm not saying that will happen, but if it does, it's a great example of how I find opportunity in the markets.

I also trade calendar events. I usually don't make trades, but always prepare for it just in case. There are usually at least one or two per month that present some very good risk:reward potential. By that I mean most of the risk associated with the actual release is heavily slanted to one side of the market. A good example was last week's Fed meeting. There was very imbalanced proportion of risk. The Fed coming out as hawkish not only was a far less likely event, but the Fed had been trending towards becoming more dovish every meeting since the last hike. Not only that, but a factor that wasn't weighed enough IMO, was the fact that the previous FOMC statement came out prior to an uptick in even more trade disputes between the US and counterparts. While infrequent, there still is good opportunity surrounding major economic events (scheduled).

Quoting DonPato
{quote} I once had a trainer who told me that if I was unsure about a signal to "send in a foot solder" to test the market. He meant that I might try to open a small position with a very small risk exposure to see if the signal (or trading theory) would work out.
This is a smart tactic and something that I try to use to prevent myself from taking bad trades.
We must learn who is gold, and who is gold plated
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