Market Analysis for Feb 1st, 2022

Trader Musings

If you're a discretionary short-term trader/swinger/positional trader, main focus for execution is entry, sizing and initial stoploss placement. The rest will follow.

These are the most important things you can control:

1) Entry = highest probability outcome in your favour and/or least MAE suffered (MAE = max adverse excursion) 

If trade is immediately in your favour, you can adjust risk to near breakeven/ at breakeven. Finance out all the risk 

2) Position Sizing/max risk = pre-determined % of loss set per day. You go over, you walk the f away. Log off immediately. Thank me later.

3) Stoploss placement = Where you are likely dead wrong if crossed, your line in sand as probabilities shift to other direction

If stoploss is terrible, you get poked out and have to re-attempt or move onto next opportunity/switch sides

If stoploss is great, you often survive by 1 tick/a few points from LOD/HOD/higher lows/lower lows entry

Place stoploss before/at the same time you enter the trade. Thank me later.

4) Your mindset/emotions = determine who's winning the battle. Don't worry about the singular results, think big picture over next 100, 1000, 10k trade setups

You can never catch the LOW/HIGH perfectly every time. Perfection does not exist

5) Exits = scale out vs all in/all out approach. Generally speaking, scale out is the best for most backed by statistics over the long run. 

You just need to capture a portion of the range width to make millions. No need to be hero.

Things that you cannot control:

1) Timing, targets, black swans

Timing = you cannot predict how price action will go every time

However, you could a good idea/feel of things once you've studied an instrument for very long. eg. timing catalysts, POWER hour, range expansion/contraction/volatility bands

2) Targets = your pre-determined targets is not what you can control, but it serves as a good guideline for scale out exits. 

At the end of the day, you must adapt with the real-time environment. If a big market participant is selling 2k lots at this pre-determined resistance on an ongoing downtrend day, you may not wanna stand in the way. You could get obliterated

3) Black swans = Rocket / Orange / Printer man saying the wrong things while you're overleveraged