Why a trader has to be nimble

If you have read, listened or followed any successful trader, one recurring attribute they recommend to have is to be nimble:  you have to react quickly, forgive yourself faster, and hold to your opinions loosely.   THE SHORTER YOU TRADING TIME FRAME, THE MORE NIMBLE YOU NEED TO BE.

As opposed to investors, who often make a living by selling their “intelligence” to the public, traders’ opinions about a particular market are pretty worthless, including mine.  When folks asked me about Bitcoin, around Christmas time 2017, I said I didn’t have a clue, but that the odds were against a furthering of the rally.  That’s just the history of charts. You look at enough charts and you know that a hockey stick swing upward will usually retrace down… significantly.  But no one should have traded on my opinion because no one asked me about my time frame, my risk appetite, my entry and exit levels, etc.  A futures trader’s directional opinion is usually much shorter than a long term investors and his opinion can and should change if the market circumstances change.   As I’ve heard Peter Brandt , “strong opinions, loosely held.”

It is true that one doesn’t have the same mindset before, during and after the trade.  Therefore, one shouldn’t just change his trade decision after the trade has been executed.  What I recommend is to have a trading plan that includes an ideal path and a change path, if particular circumstances were to occur.

For example, I know of a trader who likes to take breakouts and catch long-term trends.  He enters at the break line and adds to the position at the close of the day or the open of the next day.  However, if following the breakout, the day doesn’t close outside of the break line, said trader exits the entire position and waits for another opportunity.

In my case, I may enter a trade intraday, but if by the end of the day the action doesn’t support my initial thesis, i.e., there has been hard reversal (regardless of break line), or there is new information in the market that doesn’t appear to have been discounted, I react and exit.  At times, like today, I not only exit a position, but I reverse it.  I went long Gold last night, but after seeing the reaction to Powell’s statement early in the morning, I exited and took the opposite position, albeit in Silver.  It wasn’t easy to flip, but my thesis and the charts were also relatively short-term and I needed to act if I wanted to take advantage of the opportunity.   Needless to say, flipping a position should be done very sparingly.

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