With nearly one month left before the close of 2011, many traders are still left scratching their heads wondering what went wrong. These traders, who have now experienced considerable loss, most likely traded using managed accounts or automated systems.
Well, what has made 2011 different from other years?
- Standard & Poor’s credit downgrade of the U.S. government bond
- Debt ceiling crisis caused by inability to reach a compromise until the 11th hour
- Uprisings in Libya, Tunisia, Egypt influenced commodity prices and market psychology
- Japan’s Tsunami and Nuclear disasters
- The upcoming U.S. Presidential election
- Portuguese bailout, second Greek bailout, ECB bond buying, Operation Twist and the threat of a collapsing Eurozone
With a worldwide economy that is becoming increasingly interwoven along with increased paranoia of repeating another 2008 collapse, 2011 has raised the bar as being, perhaps, the most turbulent economic year humanity has ever faced. Surely, no single person (or even group of people) can come up with an answer of prosperity for each country in the world. This means, in all likelihood, such conditions will continue far into 2012, especially with the U.S. Presidential race coming into focus. The United States still has to deal with its debt management plans. The Eurozone must decide how to manage the Eurozone or decide the best course for separation.
What does this mean for day traders? For optimal trading conditions, most day traders expect a reasonable amount of return on each trade (or investment), relative to the assessed risk. When the markets have been this unpredictable, relying on any sort of one-size-fits-all algorithmic computation is a recipe for disaster. This is even truer for retail traders, who are subject to the effects of high frequency trading and price manipulation. In addition, most CTAs and financial planners who buy and hold long term have seen the tragedies produced by these trying times (and lost many clients along the way). Managed accounts, algorithmic trading, and the like are simply not suited for today’s wildly swinging markets. In August of this year, we saw the Dow tumble 512 points just because of “spooked investors,” as reported by CNN. That drop was the Dow’s ninth deepest ever.
Instead, retail traders who want to make money consistently must be able to recognize tradeable market conditions. This is an essential part of risk assessment. Secondly, once a market is decided to be tradable, a trader must know the proper technique on how to trade it. As mentioned earlier, there are plenty of reasons to abandon automated methods. The only other approach is to observe price patterns on the chart and trade based on them in real-time. This is called price action trading. Since trades are based on objective data, traders are provided with a reason to engage the market. These main concepts are the foundation of the day trading education provided by Day Trade to Win’s Private Mentorship Program. In addition to recognizing price patterns, attention is paid to time of day, how time influences the market, along with news events. Furthermore, trading coach John Paul provides multiple stop strategies for every trade, ensuring proper risk management for every entry. Finally, each price action technique taught during the eight weeks serves to provide the trader with a complete map for trading every day of the week.
Get Ready for Trading in 2012
John Paul will soon begin another Group Mentorship class – most likely in the beginning of January, 2012. We’ve been receiving inquiries already without even advertising for it. That means if you’re interested, please let us know so you can be added on the list. As soon as registration becomes available, we’ll let you know. E-mail us at [email protected] with any questions you may have about the Private Mentorship Program. It’s time to take advantage of the volatility instead of fearing it!