{"id":37218,"date":"2014-04-21T20:48:36","date_gmt":"2014-04-22T00:48:36","guid":{"rendered":"http:\/\/www.smbtraining.com\/blog\/?p=37218"},"modified":"2014-04-21T20:48:36","modified_gmt":"2014-04-22T00:48:36","slug":"what-statement-are-you-making-with-your-trading","status":"publish","type":"post","link":"https:\/\/www.smbtraining.com\/blog\/what-statement-are-you-making-with-your-trading","title":{"rendered":"What statement are you making with your trading?"},"content":{"rendered":"

I talk to traders all over the world and it surprises me how many \u201chigh probability\u201d or \u201cmarket neutral\u201d traders don\u2019t realize that they are making a statement with their position.<\/p>\n

By making a statement I mean whenever you enter a position, you are defining the conditions under which you will win and which you will lose.<\/p>\n

For example, when a trader buys a stock he\u2019s saying that if the market moves up he is going to make money and if the market goes down he is going to lose money. He\u2019s essentially betting on the market going up and he understands that if the market comes down then he\u2019s going to lose money. That\u2019s pretty easy to understand.<\/p>\n

The statement about a position is becomes more difficult understand when we start dealing with market neutral trades, although it shouldn\u2019t be.<\/p>\n

When I ask many market neutral traders to define the conditions under which they\u2019re willing to lose the trade, I get silence. It\u2019s as if they\u2019ve never even considered the possibility.<\/p>\n

After further questions, I find out that they\u2019re basically expecting to put on the trade and make money no matter what happens in the market. I will hear something like \u201cI do this type of trading because I\u2019m no good at picking market direction\u201d which translates to me as \u201cI do this type of trading because I\u2019m not willing to learn how to analyze the market and identify market conditions\u201d.<\/p>\n

Don\u2019t get me wrong there are many, many great reasons to choose market neutral trading over directional trading AND choosing market neutral trading for the sole reason that you\u2019re not willing to identify and bet on market conditions is not one of them.<\/p>\n

Here\u2019s the challenge with that thinking, by putting on a market neutral position, you may not be betting on direction but you are betting that the market is not going to move too far in one direction or be too volatile for the duration of your trade. \u00a0Let\u2019s face it, you are betting on the market being somewhat neutral and you should expect to lose if it is not. \u00a0That being the case, it would be beneficial to identify the market conditions under which you are entering the trade because a high probability trade isn\u2019t so high probability if the market is probably going to do something that the trade can\u2019t handle.<\/p>\n

Therefore if you want to be profitable on a consistent basis, you have a much better chance of doing so if you understand what\u2019s happening in the market, you understand the types of movements your trades can handle and you match your trading to the market conditions. That\u2019s how you create a high probability trade.<\/p>\n

For more information on identifying market conditions and creating high probability trades around those conditions to become more consistently profitable, contact me at john@lockeinyoursuccess.com<\/a> for more information on the M21 Trading System.<\/p>\n

No relevant positions<\/p>\n

Risk\u00a0disclaimer<\/a><\/p>\n","protected":false},"excerpt":{"rendered":"

I talk to traders all over the world and it surprises me how many \u201chigh probability\u201d or \u201cmarket neutral\u201d traders don\u2019t realize that they are making a statement with their position. By making a statement I mean whenever you enter a position, you are defining the conditions under which you will win and which you will lose. For example, when … Read More<\/a><\/p>\n","protected":false},"author":1040,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[1,1532,3926,1402,456,453,1373,455,15],"tags":[4703,4688,4698,1598,1259,4693,81,2451,4706,4707,55,1193,653,38,301,2445,1354,1989,4690,1349,1888,207],"class_list":["post-37218","post","type-post","status-publish","format-standard","hentry","category-general-comments-2","category-guest-blog","category-john-locke-3","category-options-education","category-trader_development","category-trading_ideas","category-trading-lesson","category-trading_psychology","category-trading_theory","tag-learn-trading","tag-options-education","tag-options-mentoring","tag-options-strategies","tag-options-trading","tag-options-training","tag-smb-training","tag-stock-market-course","tag-stock-trading-education","tag-stock-training","tag-trade","tag-trader-education","tag-trader-training","tag-trading","tag-trading-blog","tag-trading-careers","tag-trading-coach","tag-trading-course","tag-trading-education","tag-trading-mentor","tag-trading-school","tag-trading-stocks","no-post-thumbnail"],"yoast_head":"\nWhat statement are you making with your trading? | SMB Training<\/title>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/www.smbtraining.com\/blog\/what-statement-are-you-making-with-your-trading\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"What statement are you making with your trading? | SMB Training\" \/>\n<meta property=\"og:description\" content=\"I talk to traders all over the world and it surprises me how many \u201chigh probability\u201d or \u201cmarket neutral\u201d traders don\u2019t realize that they are making a statement with their position. 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