Friday, 14 August 2015

Simplify Simplify Simplify

I'd like to say a few thing for you to ponder upon this weekend. Just at the back of you mind while you're having fun with lots of things in your life.

Markets are simple. Their movements are simple. But our minds are not simple. However it is our duty, our job to make it simple.

Simplify Simplify Simplify.......... Thoreau 



Elliott Wave is Simple

The wave function is simple. Market does not move in a straight line. It goes up and down a bit and up again. There are up waves and down wave and side ways.  When the market makes a series of new highs and higher lows its believe to be going up. When the market makes a series of new lows and lower highs its believed to be going down. It makes sense to be able to know that with a single glance. And that is possible. But we have indicators that makes it even easier to find out if its up down or sideways trend.

We don't do complicated analysis of Elliott wave when applying our strategies. We have a simple indicator that does the count for us. We don't need to know where is a b c e d or f waves neither do we bother with where is wave 1 or 2. We know where is 3 and we know how to get into 5 and we know where wave 4 and wave 5 ends. And we don't do complex calculations for that. That's the beautyof it. Its all done by one simple indicator. Thanks to Snorm of www.For-exe.com

If The Market is a Wave what is the most logical place to make entries? 

The most logical spots of entering markets would be pull-backs when its trending. And if you want to trade within a range bound market then it makes sense to go short when market touches the high of the range and go long when it touches the low of the range.


What Time Frame To Trade?

Now some of us get stuck with this simplicity and can't seem to decide what Zoom Level they need. No matter what time frame you've chosen to trade you have to stick to that. Once you understand this concept it really is very simple. The market creates the same waves on any time frame so there really is no point switching from time frame to time frame.

I work Full Time What Time Frame should I trade?
Daily or Weekly time frame. Total work per week 2.5Hrs.

I work Part Time What Time Frame should I trade?
Daily or Weekly time frame. Total work per week 2.5Hrs.
or
Choose anything between hourly, 30 minutes, 15 , 10 , 5 or even one minute chart.
However if you trade the five or one minute chart your choice of instrument is limited to only a few in the market. The lower the time frame you chose then you must trade the faster moving market with lowest spread. The higher the time frame you chose the more instruments you can have at your disposal.  Follow the following table as a guide.

Time Frame                        Total Instruments to trade
M1                                       1
M5                                        1 or 2
M15                                      1- 4 (2 is the best)
H1                                        1-8 (4 is the best)
H4                                        1- 12 (6 is the best) 
D1                                        8 - 20 ( Create a mix of Indices, Currencies and Commodities) 

Don't complicate entry mechanism. 

Just select an entry method or two and every time you see it just take the trade. Work on developing on having the "lets find out what happens next..." attitude if you don't already have one. Either stop predicting or if you do try to predict you must have flexible expectations. So take the setups and manage the trades according to a planned set of rules that gives you an edge. Always take trade setups that offer at least twice as much as your initial risk. 

Winning is a combination of trades that make or lose money. 

In trading winning is not simply putting a winning trade. Anyone can catch a winning trade. Its all about following your edge and trading according to your plan. Wins and losses are randomly distributed. You can know the probability of the outcome of a set of trades yet you can never know the outcome of the next trade for sure. Are you 100% certain what's going to be the outcome of the next toss of coins. Call it heads or tails?

What skill do you need to win the next Toss of Coin?

If you said. nothing. You're right. You don't need any skill. Its the same in trading. A trader does not need any special skills to find a winner. Because wins and losses are randomly distributed.

Simplify your trading. 

AIMS Stress Free Trading is the name given to a concept, an idea, a group of individuals, who are constantly working on simplifying the methods of trading. Our recent trading strategy that we call Apples Seeds and Cherries is another attempt to further simplify things. We don't make you do math or statistical analysis here. Well, we do stats but we don't need them for our day to day trading.

Edge in the Market. 

We don't need to perform those mathematical calculations or statistical analysis on a daily basis. Those have already been done. We know what entry mechanism together with trade management plan gives us an  edge in the market. An edge is nothing but a statistical advantage based on a set of tried and tested variables. So now we have a "set-in-stone" type entry, exit and trade management plan that gives us an edge in the market  and constitute our trading strategy.

Have a Great Weekend