I’ve had a couple of apprentices who asked what to do if you can’t ‘catch a break’ and have a string of losing trades? I stole an idea many years ago from George Soros on this and also from Bill Lipschutz and Bernard Oppetit:
- Stop, pause if you get 3 consecutive losing trades, until you get back into sync with the market ie those timeframes catching the trends smoothly.
- Sometimes you are just perfectly out of sync and if you can’t beat it, join it, simplify your trading and do the opposite and turn those losers into winners ie if you are selling at the tops and buying at the bottoms, then simply (for a short-time) do the opposite – buy when you would have sold and sell when you would have bought. Whilst this may seem irrational, the reasoning is actually quite simple. You are still getting signals at peaks and troughs, and that is what is key – peaks and troughs. If the market as a hold is reversing more quickly than normal and you cannot ride that shorter time-frame, then buy doing the opposite of normal, you end up outsmarting the market and riding the waves they are dictating. Sounds crazy at first until you realise that all market moves are about being one step ahead of the market, not being a late follower, but being early, and riding the wave.
Always try trading with the smallest bet size remember. With experience, like with the driving analogy I gave before you will read the road better and the indicator is a tool for that.