Remember when you were a kid waiting for your birthday to come? You waited and waited and waited. It came … and then it was over. Do you remember the feeling when the day passed? If you do, that is the feeling I have now about the market after the recent spate of news about Europe and the Fed. I think the word I want is “anticlimactic.”
So what’s the next brick in the “wall of worry?” The US election? Probably not. Greece, Spain, Italy? Possibly. The fiscal cliff in the US? We will see. Be assured, though, something is lurking out there …
- Is this a good time to trade because it is an election year in the US?
Now that is an interesting question.
So far, the breathless media has mainly focused on the tit-for-tat in the US election. The actuality of policies, the consequences of choices, and the meaning to the market are topics not heavily debated as of yet, but that time will come in October. For now, the market is focused on, well, Europe, global economic indicators, and the next round of corporate earnings coming before you know it. Until this environment changes, I think this an ideal time to trade. The market is pushing an uptrend, the volatility is just about right, and the US presidential election seems to be less a factor than many originally thought …
Yesterday, I was reviewing a piece of risk-management software. I did it as a courtesy toward someone who asked me to look at it. Frankly, software of that type is a bit of overkill for me. The way I trade is not complicated, so defining a strategy, selecting entry and exit points, choosing a position size, allocating funds per trade, and utilizing percentage of risk versus my bank to protect myself is easy.
Of course, not all traders are the same, so you might find risk-management software quite helpful. If you do, there are some quality products out there. My point is you should be doing risk management, whether you use software or not. After all, the goal is to make money on your money, which is not an easy proposition. In fact, trading and investing are fraught with risk, so the more risk you mitigate, the more likely you are to be successful. If nothing else, check out the various products out there, as each will discuss the key points to consider when considering a risk-management strategy.
Interestingly though, as I was looking over the software, it occurred to me a while has passed since I broached the topic of risk management, trading psychology, and the fundamentals of trading in my writing. Somehow, the events of the last two or three years have kept me busy just trying to stay on top of the latest doom and gloom prediction.
In any case, no matter the fiscal reality of Europe, the strength of the global economy, or what the US election means to traders and investors, none of that is important if you do not have the fundamentals of trading nailed down as tight as you can nail them. Risk management is a key fundamental that you should nail down. If you want to know more about this important fundamental, numerous sources exist, including some on this site. Check them out, and while you are in research mode, go to YouTube and search out reviews on Risk Management software. If nothing else, the conversation about risk management will be worth your while.
Trade in the day; Invest in your life …
