I remember hearing this trading quote years ago;
“The easiest way to make money in the markets is by catching a good trend over days, weeks and months. The easiest way to lose money is trying to catch every turn in a volatile market!”
My take on this is that it’s one skill to catch a trend and trade it, but it’s another to stay out of the market when it’s volatile. It is also quite another to have it tease you with poor potential trades within poor trends and sideways moving markets. I have coached traders to success simply by getting them to acknowledge early on when there is no longer a trend, or when a trend is running out of steam and when the markets are volatile and choppy, and to mentally have the discipline to not take trades and stay away during those periods. As a result they stop the process of giving back their hard earned profits in fraction of the time it took to get them. These traders often start making these simple mistakes after they have had a strong set of positive results and become emotionally attached to their successful winning streak on the trending markets. The emotional attachment can make it hard to walk away once the market has given them all it’s going to at that time.
So how does this relate to Brexit and the In/Out Referendum?
I have seen a few enticing adverts trying to persuade traders, especially un-educated newbies, to take a financial stance (place trades) on what they think may happen with the big vote. Madness!
The only 100% fact I know regarding the In/Out Referendum is… nobody actually knows what will happen! And for that reason my trading approach in some ways is very much like my voting approach on the day – I am out!
What do I mean?
On the day I am voting out, staying out and going out! I wont be day trading on Thursday as I will be out at the Goodwood Festival Of Speed, with a group of other traders, so from a day trading perspective I wont be trading. If I was at home on Thursday I may, and I repeat may trade but I would reduce my stakes to 0.25% risk per trade and watch my trade frequency. I would make sure I stayed close to my 2-3 trades per day average and trade earlier in the day. However if the markets were erratic, choppy and volatile and didn’t give me clear set ups then I wouldn’t trade. Which is no different than on any normal Thursday’s trading. There is a great amount of uncertainty around the Brexit issue and the markets don’t like uncertainty. That may mean the markets are very quiet until the actual result comes through, it may mean they move more sharply and aggressively on a possible result and that may mean I miss opportunities. But I don’t care because one days possible big move is not what I look for as a trader and one lucky catch of a big move also won’t make you a trader. It’s just one day and regardless of the voting outcome, the markets will still be there on Friday and opportunities may well present themselves then and if not then as we go into the next trading week.
Despite being asked on many occasions recently, not I stress by Traders Support Club member’s because they no better, I wont be shorting the GBP on the “possibility” we may leave the Eurozone. I never trade hunches, rumors or maybe’s… so why would I start now! I trade strategic set-ups and this is exactly what the Traders Support Club students do as well.
Yes my personal view is I want out of the EU, for multiple reasons I am not going into here. More importantly however, I am in charge of my future, and in or out I will continue to do whatever it takes to live life on my terms to a greater level than I already do. The EU or the UK government don’t give you a better life, the amount of time, money and correct emotional focus you apply, along with the choices you make with that time, money and emotional focus will ultimately determine the quality of your life. At Traders Support Club I am committed to that and to helping my students live life on their terms as well. To me day to day focusing on that is way more important than whether you can convince your friends to leave or remain.
We had a swing trade winner today on the GBP/SGD as part of our GSP signal service and currently only one other pair from our possible swing trade list is looking like a possibility this week, this may change and we will discuss this potential trade and others in the Live Online Trading Room from tomorrow. So relating the vote on Thursday to my trading this week, on Tuesday and Wednesday my day trading I will be with lower risk (lower stakes). I will also place swing trades up until tomorrow on non-Euro and non-GBP Forex pairs even though a Brexit decision could trigger big moves across multiple currencies. After Thursday I will come back to my screens on Friday and carry on as normal. So using the words of a very British saying my suggestion is to keep calm (considered and cautious) and carry on!