In this weekend’s Trade Alerts edition we discussed the pretty unusual market cycle that was dominant in 2022: how was 2022 different, how did we handle it, more importantly what can we learn from it? It is a must-read update for traders that are eager to continuously learn. Surprisingly, 2022 was extremely rich in terms of trading insights and wisdom, even though the profit potential for short term traders was limited. Many expected a market crash which led to bias among many traders. While 2023 will be a very different year, it is imperative to get the maximum value out of 2022 (not necessarily in terms of profits but rather in terms of wisdom, both equally important elements of success).
This is how we framed up the environment and the challenges (excerpt from our Trade Alerts edition):
In a year in which moves of +2% in indexes are the norm you can be 100% sure than any short term trader and trading system is seriously challenged. Even scalpers, perceived as the group of traders that can handle any situation because they are seemingly more sophisticated, are challenged in dealing with these large intra-day and swings.
To make it even more complicated, recent price action was characterized by huge pre-market moves (instant futures market moves at the moment economic data is published).
In this environment, it is absolutely imperative to:
- Understand the environment in which you operate, also compare it with other cycles.
- Accept this environment, which is easier to do when acknowledging that every market cycle is temporary.
- Admit and accept that this type of market may come with limitations as it relates to profit potential.
- Respect risk management to avoid the damage that comes with forced trades.
Above all, and crucially important, this environment may have a profound impact on emotions of its participants. If emotions are triggered, good or bad, humans can do crazy things. So, mental strength which is the result of values like discipline and awareness, are thoroughly tested. It’s this mental and emotional system that will make or break the portfolio in a year like 2022.
We went on to discuss, in great detail, the most relevant trading practices that traders could have practiced in 2022. We did so by picking out 12 trading tips from our 99 Practices That 1 Pct of Successful Traders Apply… Daily (for Trade Alerts members):
- Point #1. Be extremely disciplined.
- Point #2. Stick to a winning strategy.
- Point #3. Spot the trend and follow it.
- Point #5. Markets are not chaotic
- Point #7. Don’t try to move faster than markets
- Point #14. Trading requires to be emotionless
- Point #6. Trading should not be stressful
- Point 18. Don’t break under pressure
- Point 19. Keep it simple
- Point 20. Create clarity
- Point 21. Enjoy your work
- Point 22. Be patient
We discussed each of these points in detail. Students of the markets may want to consider to read the entire edition and also get access to our trade signals.
Members that sign up for auto-trading will receive the weekend editions as part of the package: auto-trading + market analysis + regular educational pieces.