First of all, a very Happy New Year and may I wish you all a bright, joyful and very profitable 2014.
As I have been writing in recent posts, it is unlikely that trading in 2014 is going to be any easier than it was in 2013, not least because so many markets are either at, or reaching potential turning points. Added to this we will also have the effects of the FED’s tweaking of its bond buying program, whose impact will be felt, not only on the US dollar, gold and equities but also on many emerging markets. This is a topic I will return during the year, as it a perfect example of the speed with which money can flow into and out of assets and markets.
However, seven years into this current crisis the economic and trading landscape has never appeared so tricky or uncertain.
NEW YEAR RESOLUTIONS
So what can we, as retail traders (and investors) do?
Now under normal circumstances I am not a great fan of New Year resolutions, least of all trading ones! In fact I am a firm believer that if you want to change anything in your life such as: wanting to stop smoking, lose weight or break a bad habit- the last thing you want to do is make make a resolution. The reason is very simple, and based on what is known as ‘ironic mental control’. In other words, as soon as we tell ourselves to stop doing (or thinking) something, the more we want to do it, and In our efforts to try hard not to do something (eg eat chocolate cake) the exact opposite inevitably happens.
Suggestion and imagination can make things even worse. If I ask you to ‘imagine a chocolate cake’ the chances are you can conjure it up very easily – the way it looks, its sweet smell, its moistness and wonderful texture…so much so that just thinking about it will make you feel very hungry.
And if I say, ‘don’t think about a pink elephant’…all the mental control in the world will not prevent you seeing this image. Why? It is because our subconscious does not differentiate between ‘do’ and ‘don’t’. It simply fixes on the object (in this case the pink elephant) making it hard to resist the item in question. In fact, the more we try to suppress thoughts and feelings, the more intrusive they become, and more often than not lead us to self sabotage and ruin all our best intentions.
However, there are ways we can trick ourselves, making it easier to stick to our resolutions. One simple way is to make our resolutions affirmative and positive. In other words, rather than impose a restriction by saying ‘I cannot or must not drink, smoke, eat chocolate cake or whatever’, say instead ‘ I don’t smoke, drink, or eat chocolate cake…’ thereby giving yourself permission and a choice. Not only does this feel empowering, but it is also an affirmation of your willpower and determination.
So, with these guidelines in mind, here are some resolutions for you to consider this year :
- Learn to trust your own judgment, and if something seems to be too good to be true, it probably is. Keep a close eye on the technical picture on benchmark charts such as the VIX and USD dollar for early signs of any reversals. The clues will be there, particularly on the longer term charts.
- By all means be aware of the news…either written or broadcast….but focus on the wider, global economic and political picture. In particular, countries such as China and its current spat with Japan. At the moment this is under the general radar, but has huge implications if things turn really nasty. Also one of the best performing sectors this year has been the Dow Aerospace and Defense index (ITA), which includes the likes of Raytheon and Lockheed Martin. This has risen 60pc over the past year, compared with 29pc for Wall Street’s S&P 500.
- Regardless of what you trade, understanding cross market relationships will help you stay ahead of the game. For example, keep a very close eye on bond yields, commodity prices and, of course, the US dollar.
Naturally, I will be sharing my views and thoughts throughout the year, to help you become a better trader or investor. And in that vein, the training webinars are starting again next week, so if you haven’t signed up you can find the sign up form here. If you missed any of last year’s session you can find the recordings at my You Tube channel. The sessions have allowed us to expand on our volume price analysis trading method and to date you will find almost 70 videos at You Tube.
Finally, just to let you know, the next London meet up is scheduled for 9th January at our new venue, The Gestalt Centre in EC2. If you can come along I would love to meet you there, and you can find further details here – kind regards Anna.
By Anna Coulling