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How To Adjust To Changing Trading Conditions


Volatility has been picking up these days so you need to consider making the necessary adjustments to catch shorter-term price moves. How can you stay consistently profitable in ever-changing market conditions? – PowerPoint PPT presentation

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Title: How To Adjust To Changing Trading Conditions

  • How To Adjust To Changing Trading Conditions
  • 1. Trade- Specific Level
  • 2. Macro Level

(No Transcript)
How To Adjust To Changing Trading Conditions
  • Market volatility has been picking up lately and
    as a result you may need to consider making the
    necessary adjustments to catch shorter-term price
  • As traders, we need to adapt, as staying
    profitable in the long-run requires that you are
    able to adapt to random market conditions.

  • I have written several times about high
    probability trades understanding how to identify
  • High probability trading is one of my keys to
    success as being a trader.

  • This is one of the few times I will use the word
    casino, or references to casinos on any page
    inside my blog or associate pages.
  • As you know, I consider Forex Trading RISK
    MANAGEMENT, as traders we are RISK ASSESSORS not

  • However, just like a casino, traders are in the
    business of trying to be consistent and making
    money in a seemingly random work environment.
  • The key is to think in terms of probabilities.
  • This is actually a little easier said than done,
    because it requires two layers of belief that you
    would initially think cannot coexist.

1. Trade- Specific Level
  • At this stage, you have to understand and accept
    the uncertainty and unpredictability of each
  • Let me return to the casino for a moment and talk
    about Blackjack.
  • As you know, you never know what cards you will
    be dealt, nor do you know how each player will
    play his or her own hand.
  • These factors have a direct effect on the outcome
    of your hand.

  • Yet, there are some who make money-playing
    blackjack because they understand that each hand
    is STATISTICALLY INDEPENDENT of every other hand
    and that over time.
  • If they follow basic strategy, they can decrease
    the house edge and actually generate a small

  • The same can be true in trading.
  • We have to understand that each trade is
    independent of every other trade.
  • Whether your previous 10 trades were losing or
    profitable trades this has no bearing on the
    outcome of your next trade.
  • Once you can accept this, you can easily take
    trades without being adversely affected.

2. Macro Level
  • You have to understand that over time and with a
    large enough sample size, the probability of
    profit or loss is relatively certain and
  • This degree of certainly based on the constant
    variables that are known in advance and most
    importantly, within your control.

  • Once you recognize the independence of each
    trade and believe in letting good odds
    (probabilities) play themselves out, then you
    will have an easier time at removing emotions
    from your trades.
  • (In my opinion, the above in BOLD is one of the
    KEY factors in becoming a longer-term consistent
    Forex Trader)

  • For example, youre less likely to exit a trade
    early if you know that your trade idea has a good
    probability of being profitable in the first
  • Similarly, youre less likely to lose sleep over
    the outcome of each trade if you know that given
    enough sample size, your trading method will most
    likely work our in your favour.

  • However, before you place too much confidence in
    your trading method, you must first make sure
    that it has an edge over the markets.
  • Without an edge, you are just like any random
    fool who walks into a casino you may win once in
    a while, but over time, the casino will win
    because they have the edge over you.

  • How do you get AN EDGE? fine tuning, trade
    set-ups, entry and exit disciplines, look at all
    the trading styles you can find and demo them
    until you have your EDGE.
  • This all leads back to the TRADING PLAN.. the
    document that I believe every trader should have.
  • It contains everything that makes you the trader
    you are.

  • The bottom line is very straight forward,
    consistently profitable traders do NOT rely on
  • They simply rely on the fact and knowledge that
    their system works because they have put in the
    necessary efforts to make it work.

Thank You