It may surprise some of you, but my approach to trading is very simple.
I have one important question that I ask myself before I look to buy or sell any asset – do I know what’s driving this price higher or lower? If I don’t have an answer to this question, essentially there’s no reason behind the trade and it’s something I refuse to get involved in. If I do have an answer, I go ahead and look for an “excuse” (a technical entry point) to trade in the direction of my fundamental/sentiment bias. There’s nothing fancy when it comes to me developing a trade idea, it’s about knowing what’s going on and why it’s happening. You then put that asset on your watchlist until a trade looks technically viable.
When it comes to the technical side of trading, again I keep it simple. I make sure that I’m trading in the direction of the “recent” trend (not something that was trending 6 months ago for different reasons that has no relevance to today’s price action). Once I’m confident that this is the most recent trend that I’m trading with, it’s a case of identifying a price point where I’m proven wrong, putting my stop loss there and entering at a fair price to get to the next support/resistance level of interest – these could be pivots, moving averages, round numbers, Fib levels or closing prices. I use a few technical indicators, but price is the most important thing on my chart – everything else lags price action in real time.
One of the things that I say regularly is that “there is always tomorrow and the markets are not going anywhere”. What you’ll find is that I’m never in a rush or itching to trade the market. The feeling that you have to be involved in something is probably the biggest killer of accounts for retail traders in my opinion. I would rather take on a trader with poor risk management that doesn’t mind sitting out VS a trader with excellent risk management but has the urge to click and be in something constantly. Trading is a game of patience and discipline, not quick results. In short, I’m not afraid of sitting in cash if there’s nothing probable according to my approach. Probability is what I trade, when that’s not in my favour, I simply do nothing. However, when things line up, that’s when I tell you about it. This structure and approach has been fundamental to my trading consistency.
If you have any questions about my approach, please use the form below and I’ll get back to you…