Tuesday, March 13, 2012

Don't be a sheep - control your destiny

The uptrend in play since the turn of the year has no doubt caught out some traders, particularly those with an apparent bearish mentality. "The market is overbought" has no doubt been uttered on many ocassions, and I'm sure that some of these people were ectastic following the drop last Tuesday, thinking they had caught the top of the market. Mr Market has proven them otherwise.

No-one (despite what they tell you) can predict what will happen in the financial markets - if they could, then they would be the richest person on the planet. But they carry on, drawing sqwiggly lines over charts, pontificating about economic indicators, lousy company CEO's or analysts reports and the like. Remember, price takes all these things into account, and the simple fact is that prices have been rising since the turn of the year. Therefore, if you have been bearish, then you've been on the wrong side of the trade.

The danger here is that some traders, who are usually just starting out, or are jumping from one trading style to another, do not appreciate what it takes to be successful at trading or investing, and usually end up blindly following someone elses trades or analysis.

What worries me about these people is that in a lot of cases, they do not know their 'gurus' exit price, their appetitie for risk etc. And what do you know, when big positions go seriously against these gurus, they go AWOL on twitter and their blogs, leaving their 'followers' to fend for themselves. And, if they haven't grasped the appropriate risk management skills, they will have, in a lot of cases, caused serious damage to their trading accounts.

It is because of this that I disclose ALL of the system rules in my e-book, so that everyone knows exactly how I trade, and the elements I consider to be critical in trading a trend following system. I give everyone access to all the tools necessary to avoid such a scenario, and also to avoid being pig-headed and end up on the wrong side of a pronounced trend.

So, if you are a novice trader, please ensure that you know IN FULL the criteria for entering and exiting trades from anyone that you follow, together with learning rigid risk management. Failing that, devise a system that you are comfortable with that encompasses all the factors such as entry/exit signals, risk management, protfolio heat, placement of stops etc. If you are not sure how to do that, then learn. Failing that, then grab a copy of my e-book or contact me for some training and learn how to trade safely and profitably, with you fully in control of your destiny.

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