One Question i am asked During my Trading Session Have the markets changed? Is it different this time? Due to Algo Trading is making money Difficult to retail traders.
These questions are easy to answer, and with complete certainty: No.
Free markets behave the same as they did 200 hundred years ago. The same as they did 40 years ago. They same as they did in the bull market of the 2003-2007. They are the same today, and will be the same in the foreseeable future.
Why? Because free markets are never static. Because they always CHANGE. They are subject to the buying and selling of millions of participants, each with his or her own viewpoint and / or expectations.
Any trader can forecast a rally or a decline and have a chance of being correct. But try and repeat the feat with consistency.
The only thing you can absolutely count on is change. Markets will advance. Markets will decline.
If you have a trading system that is specifically designed to “use” change, you can take advantage of the market “changes” and make money.
One thing we can be sure of; if your plan is to just buy and “hope,” you will be in for some very tough time both financially and Emotionally.
The markets will have incredible moves in the future, both “up,” as well as “down.” You will be ecstatic during rallies if you have bullish positions , and upset and worried during declines. We have see a fast from from 12430-7511 and rally back to 9400 odd levels in matter of 30 trading sessions. If change is inevitable, the only certain way to profit from the markets is to follow a plan that is “based” on bask tested trading strategy
Advancing (and declining) markets that last months and more are called trends. Look at the last 200 years of market history and you will see that it was in a “trend,” one way or the other, most of the time. Markets go through different stages: accumulation, advance, distribution and decline.
Prices Will Go Up, Down Or Sideways
Thus a market trader does not need to predict the future, or even attempt to predict it. A trader only needs to know the rules of the game and abide by them. If the market goes up, be long. If the market goes down, be short or in cash.
And very importantly, if you can react properly to “changes” in price, you can profit.
Strategy Based On Change One the of best Hedge Fund was not able to perform in March Correction.
Human Nature is one of the biggest enemy of trader.
There are always fears that trend following may not work in the future or that the markets have changed and trend following is not the way to go.
This fear is strongest after a drawdown or during unprofitable sideways markets.
Get used to it. They happen!