In This Episode
- Where is the EURUSD headed?
- The best trader Walter has ever seen
- Why you don't have to know where the market is going
Should You Trade During Every Session?
When traders first get started in trading, there is the tendency to think that you should trade every trading day.
But is that a good idea?
We'll set the record straight and how to figure out the trading frequency that works for you. Learn how we approach looking at the charts.
Read the Transcript:
Walter: Hi, Hugh. I have this question from a trader and he is saying, “Hey Walter, where do you think the Euro is headed?” Sometimes people will ask this and it is kind of funny to me. I understand. I used to be there. I used to actually, after work, call my buddy up on Skype and we would look at the same charts on Ninjatrader. We look at the Pound/Yen and we would look at the three-minute charts.
We would sit down and we would literally say, “Okay, we are buying or selling” like it was just we knew that we were going to take a trade. We just did not know which direction and like I get it. I get it. It is funny to you and it is funny to me because you can speak for yourself but I am pretty sure you do not look at trading like that anymore.
It is more about sitting around waiting for the opportunity to present itself than it is to sit down and have to know, “Well, I am a trader. Where is the market going? That is not your job. That is not necessarily your job.
So it is one of the things I try to impress on traders. You do not have to know where the market is going at any given time. In fact, I usually have no clue. It is only once in a while that I look at it and I say, “Ah, I see what is going on here. This possibly could set up a really nice trade. If it does A or if it does B but if it does C then, no.”
So it is almost like you are thinking of probabilities. Let's say, it is like when you are driving. If you are driving and you see a car. He looked like he stopped. It looks like he is going to turn across your lane but he does not have his blinker on. So he does not have a signal on. You do not really know if he is going to turn or not.
You’ve got to like to anticipate. He looks like he is slowing down. He is going to turn right and it seems like he thinks he has enough space because I am farther back. So he's just going to turn in front of me. So I got to kind of pull back a bit and make sure that I do not slam into this guy.
Hugh: Hey there! I hope you find this episode useful. I just want to let you know that Walter and I give away something valuable every month that helps traders improve their skills. You can enter to win by simply leaving an iTunes review and leaving a comment on our YouTube videos.
At the end of each month, we'll look at the comments and reviews from the month and we'll pick a winner at random. Each comment and each review counts for one entry during the month that it's pitted.
So, if you're interested in that, be sure to enter after this podcast is over. Alright, back to the episode.
Walter: That is kind of the way I look at trading. It is like you know I look at the charts I go, “No idea, no idea, no idea, no. Okay, this one maybe. If it does this or this, possibly a trade but if it does that then definitely, no trade.” So it is kind of you’ve got to think of probabilistic thinking. The false duality error strikes traders just as much as it strikes everyone else. Which is this idea that if it did not do this then it must be this.
So if I am an NFL general manager and we draft a quarterback in the first round and that quarterback does not win a bunch of games in his first year then we’ve got to kick him to the curb or trade him or whatever. He is no good to us. It might not be that, it might be that your team sucks. It might be that your coach sucks. It might be that.
It could be that the quarterback sucks. Maybe he is athletically gifted but mentally you know he does not have that resilience that you need as a quarterback because the world comes crashing down when you keep losing. So there's a lot of things there.
Here is a famous example and I know I am getting into the NFL world here. So a lot of people are going to tune out but Steve Young was a quarterback. He played for the USFL which was a rival league to the NFL for a few years and then it folded. And then, he went and played for the Tampa Bay Buccaneers. Which at the time was one of the worst teams in the history of the league.
The San Francisco Forty-niners had Joe Montana. Mostly considered, probably the best quarterback or one of the top three quarterbacks of all time at the time. They traded for Steve Young on this terrible team. Literally everyone, except the coach, his name is Bill Walsh. Everyone thought he was a loony.
Everyone thought it was a waste to trade for this terrible quarterback. But, Joe Walsh saw a really good quarterback just on a bad team. I feel like you know as traders that is something that we’ve got to do too. We’ve got to look at it and it is not just an either-or. It is not just you know this guy Steve Young sucks or he is great.
It is not that. There are other influences. When we look at the charts, it is not just like we are going to buy or we are going to sell. It is more about, does it look like there is going to be a signal here or possibly a signal very soon. If there is, “Okay, I am going to get on the edge of my seat and keep an eye on it.” That is all I am.
So I am just an opportunity seeker in the markets. I am not a person who will know whether the NASDAQ is going up or the S&P 500 or the Euro. I do not know. I only know if it fits a certain pattern. So what are your thoughts?
Hugh: Totally. To unpack that a little bit more also I think, it shows that this person does not want to take responsibility sometimes. I mean, it is good to ask questions obviously. You should do that if you are a beginner and that is a beginner question. This might not be the case for this guy or this person but I think it also shows they do not want to take responsibility for their results.
They kind of want to ask somebody, “Oh, what is the stock tip? What is the Forex tip? Which direction is the NASDAQ and then they want to take a trade based on that. At least that is the way I read it when I get these emails.
So if that is the case then I will just hit delete because they are just looking for a simple answer. But if they ask, “Hey, how can I learn a certain pattern? How can I back test something?” Then I will answer them and say, “Oh this is how you do it, this is how you get started” or whatever.
I think that is a big part of it. Are you taking responsibility for yourself and your trading or are you trying to shove it off on somebody else? Are you trying to get the quick answer you know like that kid who copies off of you in a class or whatever in elementary school. So I think that is also good to consider.
Walter: To your point there the way trading is set up now you can just copy other people. If that is what you are doing there's plenty of platforms out there. Like Etoro or whatever where you can just link up your account to the other traders. When they take the trades you do not have to worry about it, you know.
It is like signals on steroids. Where you do not you know you know so if that is your thing you can go ahead and do that. That is fine but if you want to learn how to trade, I think one of the big aha moments is when you get to that point where you are like, “Ah, I do not have to take a trade”. Even traders who specialize in one market.
I will tell you a quick story. So there was this guy in Africa, the best trader I have ever seen in my life. Amazing. Every year he would sit down and go, “Which pair am I going to trade?” He traded the Pound/Yen for the whole year and that is all he would do. It is either buy or sell the Pound/Yen all year long.
He is a market specialist. He made so much money that his country did not want to let him out. They wanted to take his money and tax him and all this stuff because you know he was significant. He could have been a significant contributor to the economy and he wanted to get out of Africa and go up to Europe and take his family.
So they were playing games with him, not allowing visas for his family and stuff. You know it was a big mess. So even with him, my point is circling back around. My point is even this dude who just traded the Pound/Yen, still had days where he sat down and fired up his computer.
He looked at it and he said, “I do not know” yeah I do not know. It is okay to say that it is totally cool, you know. You do not have to know as a trader where it is going to go. It is totally cool. In fact that is my most common response when I look at the charts. I just do not know so that is cool. That is totally cool.
Hugh: Quick question on that. How did he determine which pair he wanted to trade?
Walter: I do not know. He would just like, I do not know if he was reading the news or he just had a feeling. I think the Pound/Yen is going to kind of skyrocket this year. He was a guy I met through Colin. Do you remember Colin Jessup?
Hugh: Yeah.
Walter: Sadly passed, awesome, awesome Canadian trader. Really cool guy, traded for three hedge funds. Amazing dude. I met this dude in Africa through Colin. He was like a totally legit, kind human and all that stuff. They had worked out that they were trying to get, I think from Africa.
Instead of going straight to Europe, they are going to go to Dubai or something to try and get out of town. But like I said the government was holding back family members and stuff and making it really tough on him because they wanted a piece of the pie you know. They saw what was coming through his account.
Which is crazy when you think about it but I mean it just points out like you do not have to be a trader that trades you know thirty-five markets like I do. You can just trade one. You can be a market specialist. It is totally cool. It is totally cool to do that if that is your thing.
Hugh: I mean, there are a wide range of ways to be successful. So find yours. Thanks, Walter.
Walter: See you!
Hugh: All the information in this podcast is for educational and informational purposes only and is not trading or investment advice.
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