Mastering a Complete Trading Strategy
Traders often believe that all they need to learn about trading to be profitable is a ‘set-up’. Unfortunately what they don’t realize is that learning a ‘set-up’ is only part of the puzzle. A profitable ‘strategy’ does indeed require a ‘set-up’ but it also requires an understanding of a much bigger picture.
Usually mastering the set up is just the first step. A well structured and concise set up shouldn’t take a competent trader very long to master. However, mastering the bigger picture takes a trader more time and effort.
We often speak to traders who feel as if they are hitting their heads against a brick wall because they understand a set up and they can easily spot the set up on their charts. However, they still encounter regular losses. They are correctly locating and trading optimal set ups but what they are missing is the other piece of the puzzle... the overall picture the charts are telling them.
What do we mean by the bigger or overall picture? We are referring to what the higher timeframes are telling you and what the price action on all of your relevant charts is telling you. In order to take that next step from a trader who can locate a set up, to a trader who is consistently profitable requires you to fully understand these issues.
So what is the key to seeing the bigger picture? You must check multiple higher timeframes and ensure they agree on every single trade placed.
Questions to ask yourself:
- Higher timeframe trends – am I trading in the same direction as the overall momentum?
- Key levels of support and resistance (S/R) – Is there any S/R in the way of my target, making it less likely to be hit? Is there S/R protecting my stop less, therefore giving me a higher probability trade?
- Indications of trend continuation or change – Are the indicators on higher timeframes confirming and reinforcing my trade direction by showing the trend is likely to continue? Are any leading indicators giving me a sign of the trend weakening, before it actually weakens?
By doing this you are stacking the layers of probability in favor of your trade decision. Sure you might get fewer trades but ask yourself this…. Would you prefer lots of trades or would you prefer to be profitable? Seldom does a high frequency of trades equate to higher profitability. Especially with new or inexperienced traders.
Not looking at higher timeframes is like driving your car and only looking 2 meters in front of you. By having higher timeframe agreement you are seeing the big picture and can make more accurate & profitable trading decisions. We can’t possibly stress enough the importance of doing this on every single trade. Seeing the bigger picture is leading you towards true mastery of your chosen endeavor. It will take some time effort and hard work but trust us, it’s worth the effort!
To learn more about our trading style and how we view the bigger picture of the markets, we are running a series complimentary webinars starting this week, we also have recordings of past webinars available for viewing immediately.
To register visit http://www.tradewithprecision.com/freewebinars.
Happy Trading!
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