Big Mike's Trading Blog

Day trading futures, discussing money management and trade management techniques, and more

Struggling to define your niche?

Lately I've noticed several traders struggling to identify their niche. They are unsure of what instrument to trade, unsure of what time frame, unsure of what indicators to use, unsure of where an entry should be and where an exit should be, etc.

These traders are struggling with themselves.

They've yet to identify what their own strengths and weaknesses are. And they've yet to have the experience in the market to know the rest (ie: instrument, indicators, signals).

You can start with either one -- your strengths and weaknesses, or your market experience -- but both must be done before you can define your niche and create your edge.

Market experience does not have to translate to years of 40 hour weeks. You can take baby steps, such as two week periods of trying new instruments, new time frames, new signals. You should also try new styles (short-term [ie: buy/sell in minutes], mid-term: [ie: buy/sell in same day], long-term: [ie: swing trades]).

It's only after you try different instruments, time frames, and trading styles that you can have the experience to know which one plays to your strengths best.

In fact, if you are unsure what exactly your strengths and weaknesses are, then a scenario like above where you try new instruments and styles for a two week period at a time will help you define them. Listen to yourself, make notes on your feelings about certain scenarios and certain markets.

For defining strengths and weaknesses, you could for instance have a notepad where you write down how the ES 5m chart makes you feel when you trade it. Write down how the CL 12 range chart makes you feel. Same goes for trying short-term, mid-term and long-term styles, if you find yourself exhausted with short-term trading, it could mean you are over-trading and one of your weaknesses is patience and discipline. If you find yourself missing signals on a mid-term or long-term style, it could mean you lack confidence to pull the trigger, and are concerned if this is "the one" trade that you should be taking.

After exploring these different methods for two week periods at a time, you'll have plenty of notes to help you make a complete list of your strengths and weaknesses, and then to define what market, time frame, and trading style suits you best.

Mike

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