Trading independently from home is not an easy task by any means. I have received various questions about last week’s market conditions, because it was a challenging week for many. Each strategy works well in some market environments and suffers in others. Our equity curve usually tells us when market conditions are changing, because we start to suffer from timing issues, or the market just doesn’t move as much as necessary, and we start taking consecutive losses.
When this happens, smart traders recognize that conditions have changed somehow, and they adjust their approach to suit these new conditions. Adjustments, for example, can be related to trade objectives (switching from multiday to intraday or vice versa), trade frequency (trading less in certain conditions, and trading more in other conditions), risk allocations (risking less during a losing streak, and risking more when on a winning streak).
The bottom line, however, is that retail traders really need to recognize when something has changed, and adapt. Otherwise the risk is that they keep digging themselves into an even deeper hole.
From the Dealing Desk to the Home Office
In 2017, the markets (especially FX) have been challenging given the declining volatility and uncertainty over Trumponomics & the FED. So we couldn’t have chosen a better moment for this week’s webinar. Our guest trader, Matt Bacon-Hall, has extensive experience as an FX spot trader within banks & funds, but he has been trading successfully from the retail side for a number of years. He is in the perfect place to highlight the requirements that can help retail traders survive – namely because he had to undergo a period of adjustment himself.
But don’t think that there is some secret indicator or magical approach that can insulate you from losses. On the retail side of things, the most efficient pathway is to simply be facing the right way before you trigger an entry and only placing trades when the market is actually trending and not chopping around in a range. That will require patience and discipline, because those kinds of opportunities will not be available every day, or even every week.
Core Trading Skills
Based on my interactions with fellow traders, whether industry professionals or retail traders, there are some common skills that they share:
1) They are all very good at recognizing when trending phases are either temporarily or permanently exhausting.
2) They have clear rules that allow them to determine when to stand aside and allow the market to offer more concrete information before stepping in.
3) They are well aware whether an asset is contracting or expanding (for example by utilizing the ATR).
4) They all stay fluent and abreast of the current drivers and influences dictating the flow and pressure of a particular asset or asset class.
Over to You
The best single piece of advice I can give to anyone starting out and/or seeking to trade from home independently is to keep things simple and run a tight ship. Simply identify the beginning or resumption of a trend on a daily chart, and insert yourselt into that trending action via a very easily identifiable pullback. Hide your stop away from where the majority of traders usually place them & run your positions for as long as the trend maintains it’s orderly flow.
But don’t take my word for it. Join us this Thursday, and have the opportunity to clarify your doubts with Matt Bacon-Hall, who will tell you exactly what challenges he faced when transitioning to the retail side of the business, and what skills will keep you on the path to consistency.
See you there!
About the Author
Justin Paolini is a Forex trader and member of the team at www.fxrenew.com, a provider of Forex signals from ex-bank and hedge fund traders (get a free trial), or get FREE access to the Advanced Forex Course for Smart Traders. If you like his writing you can subscribe to the newsletter for free.