How One Simple Trading Adjustment Made All the Difference

02/08/2016 6:00 am EST

Focus: STRATEGIES

Joseph Fahmy

Managing Director, Zor Capital, LLC

As a follow-up to last week’s post, Joe Fahmy of JoeFahmy.com illustrates how—for the first 12 of his 19 years as a trader—he would do well during market uptrends only to give back a good deal of profits during the corrections until he made this one simple adjustment.

I am writing this blog post to offer words of encouragement and to hopefully help people learn from my past mistakes. Most people don’t like to admit their mistakes because we all want to pound our chest and let the world know how great we’re doing. I have no problem admitting that I used to struggle tremendously in corrective markets just like the one we’re in now, until I made one simple adjustment.

I’ve been trading for 19 years. For the first 12 years, I would do very well during market uptrends, only to give back a good deal of profits during the corrections. The most frustrating part was that I would identify the market warning signs, know it was a bad time to be trading and still force trades in an unhealthy market. I did this over and over and over until I made that one adjustment: I simply decided to sit out.

Many people tell me there are other strategies to use during corrective markets besides moving to cash. For example, you can short, use option strategies, etc. As I always say: do what works for you. I prefer to sit out mainly to protect my confidence so I don’t get tossed around in choppy markets. I also need a mental break once in a while so I can come back fresh and ready for the next uptrend. Whatever you decide, the best advice is to keep things light and reduce your position size. In other words, save your money for when market conditions improve. To read the entire article click here…

By Joe Fahmy, Trader and Blogger, JoeFahmy.com

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