M.A.S.H. Trading?
Submitted by Michael Radkay
Steph and I were on a hike last week in Malibu Creek State Park and it was a beautiful day. As we approached the hiking trails a ranger told us a little about the park. He mentioned that about 2 miles into the hike we would come upon the area where they filmed the hit 1970′s TV series MASH. It was a comedy show that depicted the life of a Mobile Army Surgical Hospital in the US Korean War in the 1950′s. Now I’m not a fan of war, but I was a fan of the show as a kid. I must admit, I still watch the re-runs, that is of course when Steph’s asleep (not a fan of the MASH:).
As we approached the site and began taking in all of the beautiful scenery, I began to think about MASH Units and how they move on a moments notice to where the action is and where their services will be needed. But I also began to think of how they take into account an area that will protect them and their patients from harm’s way. No easy task in a war-zone.
You might be thinking at this point what in the world does this have to do with trading the financial markets. I began to focus on a MASH Unit’s ability to move from place to place with precision and made a connection to what we have to do in trading today’s electronic markets. It’s not life and death, but it is financial life and death, if you do not have the ability to move from market to market real-time with precision and accuracy.
Electronically we can now focus on many markets and participate in only those that are set up precisely as we want them to be. We don’t have to spend hours and hours researching companies to find a great stock to buy. Let’s focus on 5 key areas that we draw from to give us confidence and mobility to act on a moment’s notice before participating.
1. Fundamentals: Fundamentals take into consideration the supply and demand of a particular commodity. We can gauge this by reading financial reports released by the Federal Government and watching the actions of the Federal Reserve. Scary right? No, it’s easy. When news about the US economy gets bad, look to the Federal Reserve and watch what they do. In bad times they begin to lower interest rates to attract people to spend again by making money cheap to borrow. When you recognize this, look to all of those markets that are falling or have been falling leading up to the bad news. Take note of these because this is going to give you the confidence in the direction of the market or form your bias the next time this scenario begins to happen.
2. Direction: Invest in products that allow you to get short (sell first) AND get long (buy first) with ease. We believe you should have Forex or Futures on your radar. In our world we can sell it first without owning. What? Yeah that’s right, don’t worry about those confusing thoughts of owning first. Just focus on the fact that in Forex and Futures, if you think the price is going down, you can sell first and buy it back at a lower price for a profit. Nice!! This allows you to take advantage of the downside of the economy. When news gets good again, you can go back to buying first and selling back at a higher price to profit. Yes, that’s right, take advantage of both sides of the market. We track and have 23 Forex and Futures markets on our current list.
3. Volatility: Time and time again investors fail to truly prepare for how long an investment takes to reach a target. Finding a gauge to help you predict how fast and how far prices of your market tend to move will help give you a sense of how long you need to be in the market to achieve the goal you seek. Look to the past performance of your market to find the range (high – low = range). Now look to see how many minutes, weeks, months or years it took to achieve that range. This will provide you with some helpful insight into how long it may take for you to reach the objective you desire.
4. Risk: It is equally important to not only know what you want to make on the idea, but also how much you can afford to lose if your choice goes bad. Having sound, disciplined rules will ensure that you can come back and invest again. We risk 1.25% of our account on a trade idea. Do you have your risk parameter set?
5 Evaluation: The hardest part for most investors is to look back at what they did right and what they did wrong. Always take time to review your performance. Learn from any mistakes you made and grow from them.
PLAY TO WIN! Prosperity is at your finger tips. Go grab it!!
