Three trading tips to keep you on track (and out of the swampgrass)

Three trading tips to keep you on track (and out of the swampgrass)

Not far from where I live there’s a strip of reclaimed marshland.

It’s sandwiched between the M56 and the River Mersey. And sometimes people can be spotted doing some rather strange things down there…

There’s a Zorb football pitch (where players run around with giant inflatable bubbles covering their heads and upper bodies) and there’s also an axe-throwing range. But most appealing of all is the hovercraft racetrack.

I’ve fancied having a go in the hovercrafts for ages. And on Sunday, ten of us went to put them through their paces.

Now I must admit, I did feel quietly confident as we bumped down the potholed lane to get there. I could throw a racing go-kart around alright when I was younger, even came within grasping distance of Gianni Morbidelli’s lap record at my local track once. I did. So how tricky could it be to handle these little hovercrafts?

As it turns out, pretty tricky indeed!

We each had a few warm up laps, a bit of instruction and a debriefing, and then another few laps to put into practice what we’d learned before we performed… our timed lap!

When it was my turn I shot off from the starting line at full throttle, skimmed over the water section, dipped into the first corner… only to continue in a smooth sideways trajectory straight into a patch of high marsh grass, grinding to a halt.

I could just about see the heads of the others back at the hut as they dipped forwards, doubling up with laughter. The instructor’s voice came over my headset:

“Rich, are you OK? We all thought you’d pulled over to do a bit of birdwatching or something. You’re gonna have to stand up and rock the hovercraft out of all that swampy grass now.”

Of course, it took me an absolute age just to get back on the track. So when the final standings were read out at the end of the afternoon my second-from-last place received a rousing cheer.

I was saved from total humiliation by one the group getting stuck and recording an even slower time than me. But, horror of horrors, who do you think claimed first place with a steady hand and carefully controlled lap?

Only Alex, my missus! And she made sure I was reminded of my shortcomings once or twice that evening, as I’m sure you can imagine.

But it doesn’t do you any harm to have your ego bashed from time to time does it? It’s a good thing, in fact.

It is funny how any expert advice you are given only seems to make proper sense once you’ve messed things up a bit though.

(TIP: If you ever go hovercraft racing DO expect them to steer from the back, like a forklift truck)

It’s the same with most aspects in life, I guess. The personal experience of getting things wrong has a much more visceral impact than someone simply telling you what (and what not) to do.

And I am fond of telling my own students that the trading lessons you remember best are the ones that caused you a bit of grief at the time.

That doesn’t mean we shouldn’t set out with best intentions in mind though!

So if the roles were reversed – if I was to give my wisecracking hovercraft instructor some expert advice on trading – here’s what I might tell him.

1) Trade in a way that suits your availability

It can be so tempting to try and adopt a particular trading system or strategy you’ve discovered, but do take the time to figure out if it’s going to fit in with the other demands being made on your time.

It is perfectly possible to trade alongside a day job, or while looking after your children at home, but perhaps a strategy that needs you to continuously monitor the screen isn’t going to be the best way to do it!

In this situation I think you’d be best looking at longer-term end of the trading spectrum…

You could be a Swing trader/Position trader holding trades for days (or even weeks) at a time. You’d just need to check in on your holdings once a day – perfectly possible to do this in the evenings – and the beauty of this approach is you can participate in some really strong and profitable longer-term moves whenever they are available.

2) Set aside your start bank. Protect it and nurture it

There’s no stigma attached to trading with a smaller bank.

These days you can get seriously started by setting aside just a couple of hundred pounds and I’ll bet there are many traders who wished they started at a smaller than they actually did.

After all, it’s inevitable that there’ll be the odd ‘beginner’s mistake’ while you’re learning your craft – better to get those out of your system on a smaller scale I reckon!

But just because it might be small in size doesn’t mean you shouldn’t jealously protect every penny of your account. Manage the exposure on your trades in the right way from day one and you’ll find it starts to grow all on its own.

3) You can buy the most valuable trading tool ever for just 79p

What’s the most valuable trading tool you’ll come to rely on time and time again do you reckon?

Is it some super-secret indicator that tells you exactly when it’s time to buy?

Or a Forex ‘robot’ that slaves away in the markets on your behalf so you never need lift a finger?

Or how about a special smartphone app that means you never need be away from the markets for more than a minute?

Nope, nope, and nope again.

The most valuable trading tool you’ll ever have is one you’ll create over time yourself: your personal trading journal.

What gets measured gets improved. And by poring over your trading notes you can spot some very revealing patterns indeed. Your records can help you cut weak areas from your trading and really let you capitalise on your strengths.

You can record your thoughts and actions in a digital document but there’s something about writing it down on paper that makes it so much more personal and potent (or is that just me being a bit old-fashioned?).

It doesn’t have to be anything fancy, get yourself one of those spiral-bound reporter’s notebooks – 79p each at my local newsagents – and you are in business.

But please do make sure you are able to record your trading actions and the thinking behind them before you take your next trade. You won’t regret it, I promise.

Be Prepared: Market Moving Data Coming This Week (London Time).

Wednesday 17th August
09:30     GBP      Average Earnings Index
15:30     USD      Crude Oil Inventories
19:00     USD      FOMC Meeting Minutes

Thursday 18th August
09:30     GBP      Retail Sales
10:00     EUR      Consumer Price Index
13:30     USD      Philly Fed

Friday 19th August
– no big reports

Monday 22nd August
– no big reports

Tuesday 23rd August
08:30     EUR      German Manufacturing PMI
15:00     USD      New Home Sales

So we have another quiet-ish week ahead on the scheduled reports.

Keep an eye out on Wednesday evening for reactions to anything unexpected in those US Fed meeting minutes.

Trade safe and catch you next time…

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