Time to reveal my secret to profitable trading? Well, not reading the news does not guarantee anything but it can help you regulate your emotions when the market tries to stir up some fear into your mind. In the past, I relied heavily on the news to try and find out the latest opportunities in the market. Unfortunately, it did not work out well most of the time. Instead, it increased my anxiety levels significantly as there were always reasons to expect an impending crisis or market fallout. In today’s post, I am going to share my personal experience in trading since the start of this year as I switched from a hurried trading strategy to a calm and opportunistic style of buying and selling based on market volatility.
Strategize based on profit targets
Previously, I go for lower-lying fruits because the news always makes it sound as if there is a market reversal no matter what situation it is reporting about. Yet, all I learned from those news articles is that they are often unrelated or over-exaggerated. That caused me to want to exit sooner or buy back sooner as a trader and that has proved to be an unreliable method to use even when it does work well occasionally. Nowadays, I push my trading intervals wider by about 1-2 cents and I realize that although this reduced the number of trades I made, it increased my overall profits significantly and reduced the amount of capital ”locked up” in the market by underperforming counters.
Increase the number of constituents on your watchlist
Your watchlist is basically your soccer team and although it costs more to have more players on your team, it will come in handy when you spot talents among them or when there is an injured team member in your group. Similarly, for investing, go for more constituents rather than focusing on the few. Of course, it goes without saying that you will need to spread your capital out appropriately to maintain your profitability based on the average volatility in the market.
Price your assets fairly before buying or selling
Pricing is one of the most difficult things to do when you are trading. Essentially, you are trying to justify why you should buy or sell at a particular price point. Say for example one of your constituents is at a high but somehow you still heard rumors that the price will go up further. In those situations, how are we going to convince ourselves that the price is right for us to let go of it to secure our profit? On the other hand, buying at a low is also equally difficult because there is always a chance for the market to go lower.
Closing thoughts
Refraining from reading the news is not the same as living in denial of what’s happening around the world because as traders, we need to keep a clear head as much as possible so as to not dive into a wrong opportunity. The above-mentioned methods to increase the profitability of your trades are possible methods to keep your confidence level high while maximizing your trading opportunities in the market.
