One size fits all trading strategy?
Wouldn’t the World be a perfect place for me & all my fellow traders if there was such a strategy… alas that’s not the case. But the good thing is there is a wide variety of strategies out there that you could pick and choose depending on your risk profile, trading style & the amount of investment. However, as I found out earlier on in my trading career you absolutely need to educate yourself before taking a dive into the trading world. Only than can you make an informed decision & trade wisely & not blow up your trading accounts multiple times like I did. Before we go any further here are my 3 golden rules for you:
- Educate yourself — know as much as you can before taking the dive, saves you a lot of pain
- Choose your strategy wisely — one which suits your risk profile, investment & personal goals
- Stay on course — consistency is the key, no strategy works all the time
I started off trading Forex some 11 years ago with absolutely zero knowledge of trading… I mean I had a background in Finance & Economics but they hardly impart you any practical knowledge of trading in College. My good friend who thought I would like trading gave me some basic pointers starting off and then I was on my own. A demo account and some useful online resources and I took the leap of faith — which turned into a passion. And as I mentioned before it was a rocky path for the first couple of years as I tried to figure things out.
Turned out the best strategy that suited me was trading off technical levels as a day trader. This even worked for me years later when I started trading stocks as well along with Forex. . Let’s just say I am not comfortable holding positions overnight, over the weekend or just generally for longer periods of time. It’s just that I want to sleep comfortably at night knowing no surprises are going to greet me in the morning! Now I am not suggesting you have to do the same as a lot many people are equally comfortable & successful trading off fundamentals like data releases, Earnings and Merger & Acquisition news etc. or just simply long-term investors with bigger risk appetite and/or time horizon. Also I would be lying if I say that I have never traded data releases in Forex or Earnings in Stocks — I have taken a few of those “lotto” trades… I mean everybody caves in to the temptation once in a while, but they are few & far in between.
Coming back to the point of educating yourself before getting into any kind of trading or investment for that matter — even if you are a passive trader/investor in financial markets who has a long-term horizon where your portfolio is being managed by an Investment Adviser or a Hedge Fund Manager you should know your hard-earned money is being put to good use rather than blindly following what’s presented to you.
Also sifting through tons of strategies, trading advises by pros, online resources & books by successful traders is only going to make sense when you have a basic understanding of trading — holds true for any other field as well for that matter. Basically all 3 rules that I mentioned above are linked to one another: when you are better equipped to know what you are doing you are probably going to end up choosing a good strategy that is going to help you succeed & once that happens you are going to be far more inclined to stay on course albeit minor hiccups.
Since I trade off of technical levels only — be it Forex, Stocks or Cryptocurrencies for that matter the biggest challenge that I have to face every single day is to sift through the noise out there on social media outlets like Twitter & StockTwits where there is a lot of emotional traders who just have nothing to do with my style of trading & I end up getting trolled for my technical charts occasionally, but then again I found some very knowledgeable technical fellow traders as well on the same platforms who not only prove to be a good source of trading ideas on a daily basis but an inspiration as well.
I am pretty active on all social media platforms so if you ever need any advice or guidance you are more than welcome to contact me. If you still feel you don’t have the time do all this but still want to trade — we at Tradealike send out actionable Stocks, Options & Forex alerts on a daily basis to profit from our collective success.
Signing off Faisal Khan
Originally published at datadriveninvestor.com on June 20, 2018.
