1. Trading what you know
Usually traders know how to trade. It's just that they can't win it or atleast win it big. Recent RBI notification also suggests that, more than 80% traders are making losses. They do win... But not consistently. Why that happens... Even when you believe,you know how to trade ? Ironic ... Isn't it?
What about indicators ?
Traders often prepare their charts by plotting various indicators. But they have limited effectiveness due to the high number of false signals it can bring. Every financial Market consist of three seasons. Bull , Bear and Flat. Despite experimenting with various indicators, I still haven't had success with a system of indicators, that provides consistent results in all market seasons.
How about using a hardcore software and a proprietary script to generate signals ?
On the sales pitches and demo reviews, they work wonderful. But realtime trading is another story. Overly complicated systems often do more harm than good.
News , Social media and other forms of media ??
About a month prior , almost all of these 'news agencies' praised Adani Group for being top of the world. What if you invested heavily, just trusting the news ?? Trading based on news, events or even rumours (whether good or bad) is not a reliable strategy. If it were that simple, everyone would be making a fortune. Almost all the people who trade, read news.
Let us start from here. We trade from what all we know. From what the majority of traders know. Then how do you supposed to get an edge ?? How do you stop yourself following the herd.
Hopefully, our next segáment... 'Trading what you see ' can shed some light on that...