First of all, I want to thank all traders who have taken the time to send me an email and ask for my analysis! I really appreciate it and it’s because of you that I keep writing and posting my analysis!
I wish you the best in 2013, not only on your trading, but on every aspect of your life!
I just got back from my long vacations and I’m ready again to start trading and analyzing the market.
I admit these vacations were longer than I initially thought they would be, on hindsight though, they came in handy, and now I’m eager than ever to start trading again…
That being said, I’m off to start this 2013 with a post about what I think is going to be like to trade in 2013.
#1 Say goodbye to complex (and lagging) indicators
That’s right, get rid of all your technical indicators!!! (alright, not all of them, just keep one, or two at most).
I did it a while ago and you have no idea how it improved my trading.
Now, in 2012 we saw difficult market conditions to trade, (some say because of the difficult situation in Europe), and if you relied mostly on technical indicators to analyze and trade the market you know it was difficult right?
Takeaway: dont rely solely on technical indicators, try different tools (of a different nature e.g. price action).
#2 Analyze the market, then trade (no the other way around)
Can you relate to this scenario:
You feel comfortable about the EURUSD and take a trade… as soon as you open your trade you feel relieved. But few seconds after you start thinking, what if other timeframes are against me?
Then you start looking at other timeframes, and you see the daily chart might work against you… mmmm and decide to close your trade.
Takeaway: I always try to avoid this by doing a complete analysis every day before I start my trading. You can do the same thing.
#3 Simple is back, and stronger than ever
We’ve all heard about the KISS principle, but for some reason, we always like to over complicate things… specially when it comes to trading.
If you are like this, dont blame it on you, it’s human nature: we always want an explanation of everything (why the market moved like this, like that, we incorporate a new indicator for each move, and we end up with a system that is very complicated to trade).
But you know something, most of the time the simplest analysis has the greatest return.
What kind of analysis can simplify thing?
SUPPORT & RESISTANCE ANALYSIS
I dont know about you, but I think S&R analysis is here to stay, it’s stronger than ever and I think it’s the best tool we can use to get better results.
I’ll be writing more about S&R analysis… so stay tuned.
Takeaway: Give another chance to support and resistance analysis, make it part of your trading arsenal, you’ll get better results.
#4 Following the market is a must if you want to survive under the current market conditions
Yep… forget about guessing, forget about your crystal ball, forget about magic indicators and the like.
You know the market is the market, if it wants to go up (even when every fundamental is showing that it will go down) it will go up, if the market wants to go down (even when every expert in the market is saying it will go up) it will go down…
That’s a fact!
So instead of fighting the market, how about following it, how about instead of trying to guess the market direction, waiting for the market to make it’s first move, then we make our move… like the sound of that?
I do… I really do. Let met tell you, this is probably the aspect of your trading that will have the most impact in your results in 2013.
I agree, we all have biases, and we all make mistakes. But if you try to do this in a constant basis, you’ll get better over time, so why not starting today?
Takeaway: In a few words, follow the market instead of trying to guess the market. Wait for the market to make its first move, then make yours.
#5 Fundamental announcements have a new face
5 or 7 years ago it was a good idea to trade based on fundamental announcements (believe me, I did it and back then was a very profitable strategy – Remember the straddle technique?).
Then, the market started to react randomly to the fundamental announcements: the market spiked up, then down, and it ended up where it all started (before the announcement). So it was very difficult to trade the news…
But last year I saw a different behavior. Fundamental announcements didn’t have much impact on the market anymore, including the most important announcements (Non-farm payrolls report, interest rate announcements, GDP, etc…)
And as always, we NEED to adapt to the market conditions.
I used to close my trade before these announcements, but I think this year (at least at the beginning) I’m going to hold most of my trades during these announcements (unless market is too close to my entry level).
Takeaway: Monitor the impact of fundamental announcements and see the how you can adapt it to your strategy.
What do you think of the market in 2012? Are you going to trade different in 2013 than how you traded in 2012?
What other things you saw different in 2012 than in other years?
Please share your thoughts.
Tags: Forex Tips