ERROR #2: FOCUSING ON TOO MANY MARKETS.
As you already know, brokers are offering retail traders lots of different instruments to trade. They even have that variety as one of their best advertisements. The more available currency pairs, commodities, cryptocurrencies, stocks they offer, it’s seen as a symptom of liquidity, trust, confidence, … I would do the same, if I were a broker, and know that most of retail traders will lose their money, I will offer them any tradeable asset I can provide. More assets, more money. Simple.
Here is a very typical error we often see and begins with the missunderstanding of the fact that market is correlated.
- Thoughout the different stages we experience in our trading path, we often find ourselves in one of these two situations:
- Your MT4 platform full of charts open. I should check for all the opportunities that market shows, so I need to analyze as many instruments as possible, so that I will not miss the next opportunity.
- Your MT4 with just one or two charts. I have to specialize in one currency pair and understand it perfectly. Soon I will add more pairs when I master this one.
Have you experienced that? Can you relate?
Sincerely, I doubt if any of these two traders will make money in the market, at least consistently. Let me explain you my point of view, and you may agree with me at the end of this post.
- Depending on your risk apetite, account size, time availability decide in which market you prefer to trade:
- Stock Market: If you can spend time reading news, can study a company in depth, don’t like too much leverage. Also good for those who like long term trading. You need to study, look for undervalued companies which brong value to people. Always start asking yourself: Does this company solve any problem? That is the first question I ask when I turn on my stock radar. Charts don’t often respect technical analysis, but move more with fundamentals, data release, government decisions…
- Forex Market: A mix of everything. Including indices and commodities. For those traders who like technical analysis, correlations, Elliott, NeoWave, Harmonic Patterns. Since there are Central Banks backing with their Gold reserves the value of their currencies, surprises are limited. Also leverage is increased so brokers allow you to do more with your money. Good for both scalpers, day traders, swing or position traders.
- Crypto Market: A whole new world, apart from Bitcoin, can be traded now in many brokers. As always, study which kind of crypto is your choice. Some have projects behind, and their blueprint is full of achievable milestones. Other coins lack a project and their success or failure is based on the number of followers the can have in Telegram or other social media. For those wanting to get rich (or poor) fast, this can be a good option. Charts don’t have enough historical data to provide you an accurate Technical Analysis. Therefore, it is a bit risky. Most of them move in tandem. But few of them will give you a x50 or x100 in their next run. At the same time, not having a Central Bank behind them, makes their price unpredictable and volatile. Good for traders looking for excitement and rollercoaster trading feelings.
We can explain more about the particularities of each market if interested.
For us, the more tradeable assets our broker offers, doesn’t mean we need to trade them all. It means that we have to be smart to pick those that we need. Our best combination of liquidity, technical analysis behaviour, leverage provided, that will allow us to trade and grow our accounts continuosly is the Forex Market.
We understand that mastering just one pair is a good practice, because all pairs are different and understanding the particularities of a single currency pair can take traders a year of their life. And even doing so, focusing on only one chart, traders will be surprised of how frequently price moves without any logic. The reason is again, correlation.
The key for the success is understanding market allignments to choose which pair is the one you have to focus on.
Our Advanced Technical Analysis course is teaching students to trade the most liquid market safely. We work on correlations to understand how market alligns. We advise to trade just 2 or 3 currency pairs at a time at the beginning, but to master those pairs, we need to take a look at others. Once you decide in a monthly and Weekly timeframe which are your best pairs to trade, you focus on them until market gives you what you want, or invalidate your setups.
Our advice, once you understand what kind of trader you are , you can decide which market you prefer to trade. There will come the right time, when you will see the opportunity to diversify your profits in different markets later on.
Same as we commented in our last post about Error #1 , there are moments when risk on-off mood will allow you to decide whether is a good time to put some of your profits to work for you in stocks, or invest in some crypto projects or memecoins.
Remember we are here to help, if you want our advise feel free to contact @Chusssss or @chuslaptop in Telegram and we will try to help you in your decisions.
Remember our next edition of the ATA Course will start in July 2022, you can book your seat now by registering in the website, once the enrolment starts, we will send an email to inform you about it. We love privacy, so we will never share your email with any company, or spam you with emails. In fact, we don’t have any subscriber or newsletter option, so ensure to read our Telegram channel to be updated regarding new posts.
Thanks for all the support. Have a great Sunday!