T– Trend- Every trader big or small, young or old, married or unmarried, shall keep in mind to walk with the trend and not against it. Surfing against the waves is brave but as stupid as peeing in the wind.
R– Risk Management- This is like Investing 101, a trader should always put a threshold to his or her trades. If a trader had a tombstone it would read- “Stop Loss triggered”. Cutting down losses not only gives you time to think but also helps you put risk and reward ratio in picture.
A– Analysis- This is for all those cry babies who blame the stock markets for their losses and those who would gamble because Vegas is too far. Gamble, but don’t think that this is the mechanism on which financial markets work. Through proper analysis- fundamental or technical it is possible to forecast the trend. The word forecast does not means assurance. It means you just increased your odds to take a rational decision. So analyze and be educated.
D– Debt- The excess use of borrowed fund or leverage can lead to higher losses. Be in control. You are the master of your own portfolio. So, do not pull your pants so high that it hurt your nuts. Stay in senses, after all the only way to make a million dollars overnight in stock markets is by investing a billion dollars.
E– Equity and ETFs- Always diversify your portfolio into short-term and long-term trading instruments. Follow the core satellite concept where 70 percent is indexation or equities and 30% is satellite, meaning more active trades. Try this and you will see your risk under control. Avoid any attachment and aversion regarding any instrument. No one is an expert of any specific currency or commodity. Each instrument is driven by market forces which are unpredictable. So diversify your risk and multiply your gains.
J-Jerome Powell – It was Janet Yellen earlier, now its Jerome Powell, it doesn’t matter whether its Janet or Jerome in Jackson hole, hell can be raised during fed meetings so do not miss any. The interest decision is important but the real cream is the press conference. See the press conference and interpret the speech right.
O– Overnight Cost- Always check the overnight cost of your open trades. Because you are taking a leverage on your open positions, the brokers will charge you an interest or financing cost which normally includes a Libor plus broker mark up. Sorry! There is no such thing as a free lunch or Agree Trump… it’s just not.
K– Kondratieff Wave is a long-term economic cycle believed to result from technological innovation and produce a long period of prosperity. This theory was founded by Nikolai D. Kondratieff (also spelled “Kondratiev”), a Communist Russia era economist who noticed agricultural commodity and copper prices experienced long-term cycles. Kondratieff believed that these cycles involved periods of evolution and self-correction. You can’t make this stuff up.
E– Economic Calendar- Let me put this way, if you are in Hogwarts then the Economic Calendar is your Marauders Map. You see which data is when and which instrument it will affect. The forecast about manufacturing and labor market of various economies is displayed on daily basis. For a day trader it is the key. After all, the mischief is finally managed!
R– Reversal- A market reversal is the turning of a price trend, marked by a definitive high or low and subsequent directional move against set price action. In other words, shit gets real when the reversal happens because traders are still expecting the price to move in the same direction. They don’t know that the candle stick just turned upside down and I mean literally and metaphorically.