Building the Evidence
Strategies can’t be viewed in isolation, they need to be employed within a wider context. At My Trading Skills, we are trend following, evidence-based traders, this is our approach.
Step 1: Always trade in the direction of the trend
Students should think of this as swimming with the tide of the market. Markets are always in one of three trends: up, down, or sideways. Through analysis, it is a trader’s job to work out which one a market is in, when established, never trade against it.
Step 2: Find multiple layers of evidence
Once the trend is established we look for layers of evidence to justify a trade. These layers are not opinion or gut feel, these are pieces of objective evidence put together from well established technical and fundamental analysis techniques. Individually these pieces of analysis are not really that insightful, but when combined can be very powerful. The more bits of evidence found the better, but we’re looking for at least three to justify a trade.
Step 3: Best practice risk management techniques
We use high-quality risk management practices to ensure the risk to reward ratio is optimal.
This trading approach lets traders go long or short, it is suitable for most time frames – from 1 minute through to daily and in any highly liquid market – major fx pairs, big stocks, and commodities.
- The breakout strategy fits within our trend-following approach to trading
- The approach is called ‘Building the Evidence’
- It is a trend-following approach
- Step 1: Always trade in the direction of the trend
- Step 2: Find multiple layers of evidence
- Step 3: Use best practice risk management techniques
- The approach lets traders go long or short, in nearly any time frame and it is best applied in highly liquid markets
