Finding The Best Trades – The Secret
A question from a subscriber who’s asking whether there is a step by step guide they can follow for finding better trades. Looking at the answer to the question there’s basically two things that we need to discuss.
The first one is probability, and the second one is the actual process that you can follow. Now when we look for trades, we need to think in terms of probability. Now we can do that by always making sure that we are pairing strong currencies against weak currencies.
Now when we pair strong currencies that are expected to remain strong versus currencies that are weak and expected to remain weak, it drastically increases the probability of finding better trades.
The second step is the actual process that we need to follow. So the first thing you want to do is to get up to speed with all of the market moving events that are currently driving various asset classes right now and get up to speed with everything that has happened while you were away from your screens.
The next step you want to do is do some intermarket analysis. So make sure that you are analyzing equities across the board, making sure that you’re analyzing commodities across the board, fixed income, also obviously the currency space, making sure that you’re in tune with everything that is moving the markets right now. And this will allow you to catch wind of any potential opportunities that you can capitalize on based on cross asset flow. So these are all just examples of course, but it’ll help you to get the point.
Then after you’ve done your intermarket analysis, then you can of course go through your daily risk events. So going through the calendar, whether it’s an economic data coming up, whether it’s scheduled Central Bank or political events, make sure to highlight which data points are the most significant and how and why they are expected to move the markets.
Make sure that you not only know what’s coming up, but what the expectations are going into those events. From this, you can plan a couple of possible trading scenarios that you can take advantage of when the news breaks so that you’re always prepared to pull the trigger as soon as that event takes place.
Now after this, you should have a very good idea of which currencies are strong and expect it to remain strong and those who are weak and expect it to remain weak.
Now after that, you can obviously pair a strong one against a weak one for the highest probability trading opportunities. Now of course this table requires some knowledge of how sustainable a particular sentiment might be. Whether a currency is expected to remain pressured or supported based on a specific catalyst will take a little bit of fundamental knowledge.
And after that you can basically assess the potential risk factors that would also immediately invalidate that trade idea. Make sure that you stay up to speed with possible catalysts that can shift the risk down back to negative, so that when that type of news breaks, you know that you immediately need to close down that position or liquidate that position.
So after you’ve established your bias, then you can always move over to the chart and use any of the many technical strategies out there to look for a high probability place to enter and exit on the charts. Knowing in which direction to trade based on the sentiment means that you can, basically use any of the many technical methods out there in your favor because you’ll really know in which direction you should be trading.
Then of course if you have access to something like Audio Squawk. Audio Squawk is a great tool that you can use basically providing some excellent trading opportunities by catching wind of market moving news as it happens, and helping you to basically jump in as soon as it happens.
So going over these steps quickly…
– Step one, getting caught up with all the current and most important news events.
– Step two, do your intermarket analysis to see how various asset classes are performing.
– Step three, do your analysis of the daily risk events that’s lined up.
– Step four, make sure that you pair a strong one against a weak one.
– Step five, make sure also that you find your high probability entries and exits based on your technical method.
– Step six, have that Audio Squawk tuned up in the background to make sure that you can catch wind off that market-moving news.