Last year, my wife was talking to me about getting back to the basics. Well, at the time, I thought that was utter rubbish. After all, I had fancy charts with squiggly lines all over the place. I had 3 monitors to watch all the movements in the markets all day long. I had to watch CNBC and TastyTrade at the same time. Everything began to get so complex that my focus was beginning to come away from the basic trading strategies and run toward all these new found gadgets.
Back in June, I started an audio journal about trend following. It was working. Then I stopped because I thought I could make more money trading for the next 10 pips over and over. I made some money and lost some money but in the end, went out of my freakin mind trying to decipher entries and exits all day long.
So today, I go back to the basics. What is the “BASICS” of trading? It is a very simple process actually. Support and resistance plays a huge role. Also you can ask yourself this question, ” Is the market trending or is it choppy?”
Thats about it. If a trader can get in on JUST ONE big trend in a year, he can make thousands of pips on one play.
For instance, the gbp/jpy pair from December 2012 till now has produced a trend of over 4,000 pips. This is one trend in one currency pair. a $10,000 account using no leverage whatsoever would have produced a 40% return this year. If that same trader would have traded just 5 mini lots, which is only 5:1 leverage, that $10,000 account would be up to $30,000 on this one trend alone.
This is the power of leverage and getting in on that one big trend.
Now in the past, I have written many posts about short term trading and hedging. Hedging is still valid but at this point, the longer term trading just seems to be where the money is. I have always known it but have not always done it. I scroll through the charts I have posted on this blog and kick myself in the rear because I was making a shitload of money while I was trend following and the short term trading (which is what I have been doing for the past 6 months) has been one headache after another, just barely breaking even.
It is time I go back to the basics. I feel like Todd Hoffman from Discovery channel “Gold Rush” right about now. “If I dont do such and such, we have no chance of meeting our $1,000,000 goal”
So its time for me to go back to the basics. I told Rob Booker back in my first interview with him, ” I know trend following works but I just don’t like it.” Here is what I have to say about that statement… Who the crap do you think you are, Ryan Herron, to base the future of your entire family on what you like or not? If it works, just do it.
Back to the basics.