- Trade what you know
- Make sure you also love your entry
- Focus on being a bargain hunter
WHAT YOU KNOW - Here's a quick tip for you. Trade what you know and take it slow. There's no point in throwing yourself into a market you aren't comfortable trading. While all of the markets I trade are highly liquid, there are definitely intricacies to the different markets and it's important to have a good feel for before deciding that you want to trade a specific market. Some markets are more volatile in certain sessions, while others are more sensitive to economic data and risk sentiment. So before you decide to dip in, make sure you have been watching for a while and have a good feel.
FX GUY - To this day, there are markets I just don't have a good feel for and so, I stay away. With the exception of trading major equity market indices and major commodities, I am an FX guy and this is what I know. While many of the principles apply to other markets, I'm not running around trading individual stocks because I know there are other things going on there that I would be missing out on and by extension, this would reduce my level of comfort and confidence in taking that position, which is not what I want.
MORE THAN THE IDEA - One more tip for today. It touches on the whole idea of loving your trades. But if we break that down even more, there are times when there is a trade out there that you see and love, but also know it isn't quite where it needs to be for you to really want to get on board. So for example, I love the idea of buying GOLD into the current dip, but it just hasn't reached a level where I would be absolutely compelled to jump in. There are many times where I've loved a trade but didn't wait for the entry that I loved. This can be costly and is something you need to master.
BARGAIN HUNTER - When you trade markets you need to think of yourself as a bargain hunter walking around at a street fair. There are many deals to be had, but you are only interested in the best deals. You want to walk away from that fair knowing that you took full advantage of the situation. I suppose the best position to be in is to be buying from someone that doesn't want to sell but needs to sell. So as far as markets go, this means you are looking to buy when someone is holding onto a position they are overcommitted to and need to exit for a big loss even though they would still love to be holding on. This is probably someone who loved the trade but knew when they got in, it may not have been the best entry.