‘Breaking Eggs’ To Stir Up New Trades

2021-05-11

A day like today is an example of why traders should consider changing their trading recipe as the market broke to the downside across all three major indexes.

Entrepreneurs like to say, “You have to break a few eggs to make an omelet.”

For traders, this wild environment keeps breaking eggs (pulling back) and traders need to adjust their recipe (trading plan and mindset) to keep cooking (making gains) in a volatile kitchen (market).

Like learning to cook, trading is a learned skill.

And the learning process can be uncomfortable, because traders must at some point step into the heat of the market and take a chance on getting burned.

To improve as a trader, try focusing on being comfortable when uncomfortable.

This requires a conscious effort to change your trading plan to match this market environment and develop a hardy mindset to handle the sudden ups and downs of this volatility.

There is no way to ever know exactly how a trade is going to work out even if we have a setup that is likely. Some of those trades will fail (broken eggs) and land on the floor to be tossed out like kitchen trash.

Other trades can heat up and turn out deliciously profitable.

Funny thing is — successful trade or a failure — traders must maintain a steady mindset either way and not let emotions overrun their trading habits. One good omelet (profitable trade) doesn’t make an executive chef (trading guru).

This market has put into play a variety of new “rules” that have forced traders to adjust the way they trade. Even veteran traders have slowed their trading to reassess what is happening and ensure they have all the ingredients to navigate the volatility.

What’s a few broken eggs look like in the Simpler kitchen?

Take John Carter, Founder of Simpler Trading, as an example. Last year during a pandemic he was forced to change one of the fundamental elements of his trading plan. He adjusted, and it paid off with multiple million-dollar trades.

Stepping outside the comfort zone to create a new, or at least readjusted, trading plan. Stay within risk parameters and try a different trade setup and see what happens. If it results in broken eggs, learn from it, develop confidence, and adjust the recipe for the next opportunity.

Part of the intrigue and excitement of the stock market is trying new things — getting comfortable being uncomfortable. 

This is fundamental to how many on the Simpler team have turned a pastime into a full-time lifestyle.

We Saw: Wild day sending major indexes scrambling — 

  • Economy firing up, but key sections not working
  • States, feds calling on workers to take jobs available
  • Panic fuels gas grab with pipeline down

We’re Watching: Cautious trade management in dicey market —

  • Key tickers pulling back (reversion to the mean)
  • Taking profits and looking for ‘bonus’ trades
  • Setups that are ‘shiny’ — silver, gold, honey badger stocks