Fading Trend

It is important to be able to see the first signs of a fading trend. There is no better exercise than to watch hundreds of strong moves on history – the moves that always, inevitably fade, lose strength and reverse. Nothing lasts forever, and in order to stay in balance, Market must go through constant change, allowing some instruments to appreciate while others must depreciate. Inevitably, they will trade places, as one trend changes into another.

Take any market you trade and see a trend fade. Do not just look at one instrument, ask where the money is going if it is flowing from this market? If stock market becomes bearish, the money must go somewhere, whether it is bonds, metals, oil or just cash.

Currency Cycles

Each currency constantly moves in cycles. Each one has a cycle on each timeframe, starting with Weekly, then Daily and H4 inside of it. My job is to read traders’ emotions in every cycle. My job is to read price action in each cycle. My job is to watch how cycles change.

A currency cycle does not end without reason. In order for any bullish cycle to end, another currency’s bullish cycle must replace it. Even pausing of the cycle does not happen without reason – another currency must temporarily generate a strong move in the same direction in order to force the main trending currency to pause.

By trading at the end of the currency cycles I am ensuring the greatest potential for currency appreciation or depreciation.

By watching all currency cycles, I ensure an understanding of the reasons why a cycle ends or is paused.

By patiently executing one cycle after another, I ensure long term profitability, guaranteed through the edge present in my trading method. I do not have to worry about any individual trades – my job is to catch the cycles.

At the end of each successfully identified cycle I will always come out on top, regardless of likely losses accepted while trying to establish the winning entry. Through not worrying about an individual entry and instead concentrating on catching the cycle, I ensure relaxed and free trading.

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Long Term Conviction

There are many differences in our approach to short term and long term trading.

When trading short term you can start your day 3-4 hours before the start of the trading session, do your analysis, check the calendar, prepare the trading plan for this session and then follow it. You are only interested what the Market will do in the next couple hours so you only need to remain confident in your plan for this short period of time.

If you are not seeing the Market well today or just not feeling particularly well, you can simply skip the trading session and start over the next day – one trading session is not that different from another, so you will not miss much.

The main difficulty in long term trading is that we are preparing the trading plan for coming weeks and months and the trick is to maintain your conviction in this plan over a long period of time. No matter what the Market will do today it can hardly cancel your long term trading plan. It will gradually update your view with new information and it is up to you to keep the original scenario in your consciousness throughout many weeks until it plays out or is canceled.

How many times I would prepare the plan – a result of careful analysis over many days – just to find myself losing confidence in it over the next couple days. The Market does not cancel my scenario per se, it is just not confirming it yet, and yet sometimes it is easy to lose the sight of the big picture over the course of a couple days.

Two trading styles cannot be compared in terms of being better or worse – they are just different. Interestingly enough, they are not so different in their technical approach – the analysis methods and price action patterns can be very similar. Their main difference lies in psychological demands.

Long and Short term trading will affect our lifestyle differently, require our attention span to be very different and will present us with different psychological challenges every single day.