A great online trading strategy that you should follow is “the magnet”. What makes this strategy so great? Well, one could say that it magnetizes you wherever you need to go in the market, pulling you this way and that way like an actual magnet does with metal objects. By using this online trading strategy, you are solidifying your potential for success.
THE LEADING INDICATOR
The magnet operates as a leading indicator of where the market is moving on a daily basis. It leads you by giving you a very good indication of what’s going to happen in the market before it actually happens. You might not just call the magnet an online trading strategy but your own personal little psychic friend. It’s going to really give you a stronger edge in the market, as you can position yourself before the move happens. RSI and moving averages are, in contrast, lagging indicators and tell you what’s going to happen after the price action has occurred, giving you little to no edge.
BEST WAY TO TRADE MAGNETS
Magnets carry an 80% hit rate but they must be built with a trade set up around them to utilize them to your best advantage. The way I like to trade magnets is at the 8 AM open, which takes advantage of the increased volatility. Plus, doing so allows you to have a full, free day, finishing up your work early to do whatever you want while your profits build. This will be a great benefit if you are eager for the free time to do other things throughout your day.
But, what other way can the magnet be used? You can trade it after the open, if the market is either at a level of strong support or resistance, with the magnet’s target still not being met. You can also be an early bird and do it before the open, meaning before 8 AM. You might want to either enter the trade in its entirety on the market or do half the trade a bit before 8 AM and use the other half during the rest of the day, if the market opens up the way you want it to.
USE LARGE STOPS
Another way you can trade the magnet is by using larger stops. Personally, I prefer rather tight stops for the trade set-ups for the magnet but large stops definitely come in handy, as well. If you want less risk, increasing the stop is the way to go. And how else can you trade? By being careful. Remember, that the magnet’s 80% hit rate means that there’s a 20% loss rate. And just one bad trade, that you keep running, can leave you with nothing in your account.
Therefore, it’s always good to engage in trading with humility. Learn how to accept a relatively small defeat and how to admit that you’re wrong. It’ll be a much easier pill to swallow than a truly devastating loss that resulted from hubris.
Trade in a way that fits your own preferences and style while also maintaining the discipline to handle whatever goes wrong and to prevent any unnecessary losses. In doing so, this online trading strategy will not fail you.