The Traders Dilemma; Dealing With 'Endless' Rallies
Perhaps the thing traders find most difficult and often realise once its too late is handling rallying markets.
Firstly, It's a good idea to accept simply that this occurrence is natural; there will never be a market that rallies and rallies for a significant period. It just comes when there is extreme sentiment in one direction that can't be broken by countering sentiment.
The key is this; eventually, the sentiment of the market will change and the market will reverse. Just as an endless rally is inevitable, so is a fall. Normally, my charts consist of Moving averages to keep inline with this. Price always returns to them eventually because of a change in sentiment.
Otherwise, markets would continue to rise with no fall, which would make the JPY worthless. That is not going to happen (or atleast not soon). At some point, it becomes necessary to short CHFJPY (Now if you want a good deal) before it falls.
IF you don't believe me, load up any other chart (notably USDJPY where we had the same situation). People were afraid of getting short incase the price rose further, which is a problem.
IF you are afraid of this you are trading too large. If you drop your size you will be able to withstand harsh moves and you will not panic.
Furthermore if you spread your positions out and do not bunch them you will be less exposed as price rises.
So in short, you need to be proactive before and after rallies begin. You need to know what you are going to do if you get an extreme push in the price of the market. You need to survive longer than the market will realistically go within a 5-10 YR cycle atleast.
Add only where you can afford to within your portfolio and DCA. Reduce where necessary and do not overleverage.. And do not decide to take action or place to take action only when the market has rallied. By then, its often far too late.
Read this and remember it. It will save your butt!
Firstly, It's a good idea to accept simply that this occurrence is natural; there will never be a market that rallies and rallies for a significant period. It just comes when there is extreme sentiment in one direction that can't be broken by countering sentiment.
The key is this; eventually, the sentiment of the market will change and the market will reverse. Just as an endless rally is inevitable, so is a fall. Normally, my charts consist of Moving averages to keep inline with this. Price always returns to them eventually because of a change in sentiment.
Otherwise, markets would continue to rise with no fall, which would make the JPY worthless. That is not going to happen (or atleast not soon). At some point, it becomes necessary to short CHFJPY (Now if you want a good deal) before it falls.
IF you don't believe me, load up any other chart (notably USDJPY where we had the same situation). People were afraid of getting short incase the price rose further, which is a problem.
IF you are afraid of this you are trading too large. If you drop your size you will be able to withstand harsh moves and you will not panic.
Furthermore if you spread your positions out and do not bunch them you will be less exposed as price rises.
So in short, you need to be proactive before and after rallies begin. You need to know what you are going to do if you get an extreme push in the price of the market. You need to survive longer than the market will realistically go within a 5-10 YR cycle atleast.
Add only where you can afford to within your portfolio and DCA. Reduce where necessary and do not overleverage.. And do not decide to take action or place to take action only when the market has rallied. By then, its often far too late.
Read this and remember it. It will save your butt!
Note
Shorting Sporadically. i.e. 164 168 etcNote
RE shorted lightly again.Note
Always a good idea to spend this weekend planning your MAX size going on from here and the most amount of DD you can incur :)Note
Exit trades taken Friday for gains. Use this to keep risk under control. Do not add re short unless impulse RE push occurs.Note
Srill awaiting RE bounce for short entries.Note
Re shorting @ 1633Note
Entered Re shortNote
exit for gains.Note
Exit for further dca gains.Note
Mammoth fall, exit DCA shorts considering light early hedges.Note
Exit long hedges on bounces. RE short radical push.Note
Exit any remaining hedges for long side gains. Another great week of trade management, re shorts appropriateNote
Re shorting Via DCA methods into monday.Note
Re short higher than prev high light.Note
Holding DCA shorts.Note
Short bias remains.Note
Still short bias.Note
Exit shorts for gains.
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Free Discord Secret Server:
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Posts Not financial advice.
Disclaimer
The information and publications are not meant to be, and do not constitute, financial, investment, trading, or other types of advice or recommendations supplied or endorsed by TradingView. Read more in the Terms of Use.
Free Pro Multi Asset Trading Guide:
bit.ly/learnttm
Free Discord Secret Server:
discord.gg/tXAcxFVCJU
Posts Not financial advice.
bit.ly/learnttm
Free Discord Secret Server:
discord.gg/tXAcxFVCJU
Posts Not financial advice.
Disclaimer
The information and publications are not meant to be, and do not constitute, financial, investment, trading, or other types of advice or recommendations supplied or endorsed by TradingView. Read more in the Terms of Use.