Tag Archive: screen

Stop Staring At The Screen

An old friend  shared how discouraged he was with not being able to manage his impulsive trades. That evening we decided to observe how he traded the US  session.

He certainly was hard working and eyeballed every 5 minute bar.  He had a reasonable trading strategy, but on several occasions strayed from the original plan, and “analyzed” various opportunities on the fly.  Quite a few times, I had to stop him from committing to a trade regardless if it eventually won or lost.

My friend was too eager to make money. (In his case, to make up for  previous lost investments.)

Based on his trading methodology, I explained how he could use a simple filter, as well as an alarm alert.  After he prepared a simple trade management plan and set the alerts, I told him to just leave his laptop. If he wanted he could watch TV, read a book, or even review market updates from Bloomberg, Forexlive etc – just not watch the currency rates or the charts.

He need not be dismayed – many traders were like him. These traders who stared painfully  at every movement, hoping to catch an elusive winner, ultimately put on impulsive trades. No amount of self restraint would have helped.  For my friend, it was better to have a strategy that would not require watching the market so intently.

By using a filter, we let the market scream out to him when his edge was in play. Once the alert had been activated, he could review how feasible the edge was in the current market condition – and if he decided to take the play – to monitor the market for a potential entry or set a limit order.

If successfully executed, he needed to set the necessary stop and take profit alerts, be watchful over when the next major event or announcement would be made, and just leave his laptop.

Simply not being glued to the screen  is itself  a major step to avoid impulsive trades.


Share

Comments are closed

Edge, Not Direction Is The Basis For Strategy

littl121 post on September 29th, 2015
Posted in Trading Tags: , , , , , , , , , ,

Oft times I am asked where a particular currency is headed. My usual answer – I am a short term trader and have little grasp on forecasting currency direction. Some are smarter and ask whether they should buy or sell a particular currency. My reply – both are acceptable, insofar as they have identified a buy edge or sell edge before jumping in.

Which brings me to the point – a trader does not trade direction, he trades the edge.

This is not to discount direction, but with crystal clear thinking, direction is just the result of an edge in action. (What about momentum? Momentum is a bit more complicated, and can be used as an edge or be a mere spectator by-produce. But more of that next time.) So a trader can buy the US Dollar or sell the US Dollar, it does not matter if he has identified a worthy edge when he buys or shorts the currency.

Normally when I develop a strategy, I identify the possible edges, and then construct the most proficient set ups I can to take advantage of those edges. Conversely, if a set up appears, I want to know if the edges are in high probability play. Some traders advise when a set up appears, one must take the trade regardless how he feels – since emotions can convolute judgement. By all means, if that works for you, go ahead. That edge may lie in success based back testing, position sizing, continuous trend run and so forth. Truly, there are many ways to successfully skin a cat. Knowing how unpredictable the market can be, I be a fool to claim otherwise, and am merely sharing what I know works for me. But whatever method a trader employs, he must always be able to see the edge in what he does.

This passage may appear fuzzy and incongruent to some. It is not by deliberate effort or accidental thinking that I wrote in such manner. Either the reader understands or does not. If he does not, then he requires more screen time and reflection – truly that is the secret of seeing where the edge lies.


Share

Comments are closed