1 – Stay aware of your emotions

‘The markets are driven by sentiment among retail traders. All you see is negative news – it’s pumped at you,’ says Gavin Holmes, Tradeguider CEO.

‘If you feel bad and you go and start trading you are probably not going to get good results.’

Grigory Margolin, Tradeguider CTO, agrees with Gavin. ‘When we are trading we need to be very stable psychologically,’ he says.

If we’re being pushed along by our emotion in an unaware way, we may not be making decisions based on the right factors.

And remember, the Wyckoff VSA method  is about not getting manipulated by the smart money, who use the news to sway opinion and sentiment.

But says Gavin,  ‘You can’t sit and worry. Many traders, if they are in a [trading] position, worry about it but you can’t. One of the most important parts of being successful in anything in life is belief that you can achieve.’

Gavin goes on to recommend that readers check out The Biology of Belief by Dr Bruce Lipton and Chapter 9 of Trading in the Shadows of the Smart Money, for more details on how inner belief relates to outward results when it comes to trading the markets.

Action Points:

• If you become aware that your feelings are stopping you from your most effective trading then pause your trading till you are more calm and grounded.
• Take active steps to deal with them in a healthy way.

We`re always stronger when we practice returning to a place of inner stillness, whatever way we do it.

2 – Limit your information diet

‘A lot of people are confused by the noise of the media, the things their friends tell them, things their brokers tell them,’ Gavin observes. ‘Don’t allow the noise to get to you,’ he says. As Tom Williams said, ‘The chart never lies.’ Stay focused on your charts.

Gavin continues: ‘You’re getting information from multiple sources and you end up with analysis paralysis. The mind becomes so confused that it can’t make a decision and it can’t trade and it misses out on  a big opportunity.’

Action Points:

• Do an audit of where you get your information from, how much news you consume, what you talk about with other traders.
• Don’t allow anything to distract you from being focused on what the chart is telling you and executing your trading plan.

3 – Be ready for opportunities when the news is bad

So once you’ve got better at staying in touch with what emotions you’re experiencing, you acknowledge them and deal with them effectively and also you’re not allowing yourself to get swamped by too much information, you can use news announcements to your advantage.

‘Tom Williams said  that when the news is bad and it’s getting worse, and the chart shows the clear Wyckoff VSA principles to get in (Bag Holding or Shakeout), then that’s the time to buy’, comments Gavin.

He recalls what happened to BP after the Gulf of Mexico oil spill in 2010, or the markets after the US fiscal cliff crisis of 2013, the Ebola crisis in 2014, and the pandemic – BP’s share price rose and the markets made new highs.

‘The market doesn’t care what the news actually is, it just reacts,’ he observes.

Action Points:

• Trade what you see based on Wyckoff VSA.
• Buy on the dips and look for market collapses on bad news to see if there is an opportunity to buy as signalled by for example Bag Holding which is a down bar on a narrow spread which closes in the middle with Ultra-High Volume. 

Market volatility at the time of writing as captured by the Chicago Board Options Exchange`s CBOE Volatility Index, which measures volatility based on S&P 500 index options.

4  – Think about your trade management

At the time of writing there is volatility in the market and at such times it is important to adjust your trade management strategies accordingly.  

For example, if you are an intraday or swing trader or an investor,  ‘keeping stops as close to the price levels as you would in non-volatile markets may cause you to lose money or to lose the opportunity to make money,` advises Grigory.

So adjust your trade management strategies in accordance with changes in volatility

Action Points:

• Experiment with the placement of your stops and/or with the size of your trades.
• Decrease your trading lot size to reduce risk where required.

Summary: It`s all about mindset skills

As ever this is all about mindset: self-awareness and appropriate action. Stay aware of feelings that might be arising for you: acknowledge and respond to them before you end up reacting to them in ways that are both self-sabotaging and hurt your bottom line.

Interrogate your own underlying beliefs and if it turns out they are holding you back, do the work to convert them to being nourishing and  helpful. If, like most people, you need help untangling this, find a professional mindset coach or similar therapist to assist you.

And then once everything is aligned you can start to prime your mindset with visualisations. affirmations  and other such techniques. This starts with what you do the night before as well as how you prepare before you start your trading session.

We covered a lot of the points mentioned in this blog in our October Masters Event which was so successful we are repeating it this month.