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Creative Trading

[Originally posted: Monday, February 05, 2007 8:32 AM]

Today I read an interesting blog post on TraderFeed. From that post I quote the following section:
4) The successful trader is creative. I think it's fair to say that his approach is a short-term trend-following method. His way of evaluating the market trend, however, is unique. He is definitely not just looking at the same old 14-period oscillator that comes pre-programmed in most charting applications. Similarly, he has clear stop points and price targets, but these are defined in a unique way, based upon the market conditions he's observing. This "out-of-the-box" thinking style is common to successful traders, I've found. They look at markets in unique ways that help them capture shifts in supply and demand.

I've italicized the important part. That is using the current market conditions to determine how you manage the trade.

I think that a lot of traders like to think that they already do this and control this but I don't believe that many traders have a scientific method for determining when to enter and exit based on the conditions.

It is my opinion that you need to use a measuring stick to tell you when to select the tools you need. It's like the weather. You select the clothes that you are going to wear today based partly on the prevailing and anticipated weather conditions. Likewise you should be pulling the trading tools out of your tool box dependent on the market conditions - the actual market conditions - and not what you think those market conditions "feel" like.
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