1. My approach is to buy near support preferably after it shows signs of rebounding. Similarly, I short near resistance preferably after it shows signs of falling.
2. The trend is my friend, so one of the first things I do is determine the trend: long or short and I follow signals accordingly.
3. I go for a reward/risk of at least 3:1 in my favour. Otherwise, I do not take the trade.
This is only the summary of my style of trading. My approach is a wholistic one. My methodology is only a tool, such as fundamental analysis or technical analysis is a tool. Use the tool appropriately, do not use a hammer to hit a screw, or a screwdriver to hit a nail.
Teaching my methodology has no real value without also teaching the more important stuffs like risk management, emotional and mental state management. You may use a hammer to happily hammer your nails, until you meet a screw and you just cannot hammer it in. Then you get frustrated and mistakes happen. Same with trading.
Now you may say you are investing not trading. I say it is just labels for the activity we do. I see investing as trading abeit for a longer-term duration. We can argue this for hours but the end result is the same. Trader and/or investors and/or speculators, estimated 95% lose money in the market.
I know cash-rich people who win close to a million over 1 year, then proceed to give it all back and more in 6 months. Then rinse and repeat. It is a common story because we are only too human. The market environment however is an alien landscape. We see the market as money on the floor, but thats an illusion. When we enter the market, we are actually more on a tightrope above the grand canyon. The market makes geniuses out of us, then turn us into fools.
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