What Are the Most Effective Trading Strategies Today

Hi, Brian McAvoy with Inside Out Trading here. And today I want to talk, today we're going to talk about trading strategies and it's on a little bit of a different level than you might be thinking on. I am going to share with you a couple of my favorite strategies right now and why I like them, why I've been recommending them for years and but really let's kind of get clear on a few things first because believe it or not, there are a lot of people trading and I was one of them for a long time. Maybe you've experienced this as well where you know, with trading there are a lot of words that kind of get loosely thrown around and they seem easy enough to grasp. But a lot of times people don't have a real good understanding of or the meanings can be very subjective. The words in trading are huge. And one of the things I try to impress upon people is make sure that we're clear on the words. Make sure you understand the words that we're working with. I mean there are, there's so many words that are thrown around and they're very sloppy used and people want to why they have a hard time understanding or learning Trading. There's so many words that are just sloppily used where they're thrown around and people don't really have a big grasp on strategy is one of them. I mean a lot of times, one, I love asking a few basic questions people like what is trading? What is a system? What is a strategy? Because a lot of times people don't have a proper understanding of it. And a strategy, I mean what do you think a strategy is? When, when I ask people, a lot of times the answer that I get is strategy. Well, it's my rules, it's my indicators or what's my edge, I'm going to get in the markets to my edge. And the thing is a strategy, if you think about it, is a, in general, a strategy is a very specific plan with a specific objective in mind and it's your steps or your path that you're choosing the things you're going to do to accomplish that objective. That's what a strategy is. Now, different context strategy might be how you're going to deploy resource limited resources to unlimited options. That's a valid perspective and it can be useful here. And actually it is in certain contexts. We'll, we'll come back to that. But sure, wow. But a strategy really is your plan, your thoughts for how you're going to, in, in a very specific set of circumstances, how you're going to get in and out of the market and make money. That's what a trading strategy is. It's not a general thing where it's like, oh, just I'm going to go to the markets and see what's there. Well, maybe that is a strategy, but it's a very loose and sloppy strategy where you're just going to see what the market's presenting you and you're going to respond to it. That is a strategy, not a great strategy. That's a discretionary strategy. And you, that requires, that's like intermediate to high level trading if you're going to be truly discretionary, where you're just responding to whatever you see, whatever comes up each day. But generally for most traders, your strategy should be you're looking for a very specific set of circumstances and your plan of action is going to be a very specific set of steps to take advantage of those circumstances. So what do we need to have a strategy? Well, first of all, with your strategy, it's based on certain assumptions or thoughts about what we think is going on in the marketplace. It is, it's every strategy needs to have an underlying premise or what do we think is going on that's going to allow us to get in here and make some money? What do we think is going on? So that's the first thing, that's the first part of the strategy. What do we think is going on? Because remember, the markets are. Well, there's a big uncertainty in the markets. Yes, there is an uncertainty in the markets in general. In any given moment, nobody knows is the market going to go up or down in overall? Yes, nobody knows with a hundred percent certainty what's going to happen. So there is an uncertainty built into the market, but what are the markets? The markets are people and computer algorithms. And these are two things here that are set to respond to certain events, to certain things going on. And then when those things that go on to say a particular event, like a news event or whatever, that there's going to be a response. And that's why trading patterns have been developed over the year. And the things that give us an edge, because when an emotional response or a response pattern is triggered in the markets, again, whether it's people or algorithms, there's a planned response to that or there is a common response. And when we see that response start to play out, that's what gives us our edge as traders is, hey, I've seen this before. I mean, if you think about almost every trading strategy that's been developed is because you had somebody sitting there looking over tons of charts and like, I keep seeing this over and over again. And then it's like, oh, hey, I can, when I start, if I can recognize that at the beginning, I can get in on that at the beginning of it and take advantage of how it plays out. That's how almost all trading strategies have been developed. That's where the. Almost every single one of them comes from. It's because somebody saw something repeatedly happening. We're now in the middle of all the uncertainty. We have windows of predictability, and it's in those windows of predictability that we get in. And so long as that any given pattern, response pattern in the markets is triggered and we recognize it, unless something disrupts that, it's likely to play out. And that's what gives us our edge as traders. And some, you know, some knowingness going into trading is okay, yes, I've learned how to identify a certain set of conditions where what's going to happen next becomes likely. That's what gives us an edge. If it was purely random, every trading chart would look like a scatter plot instead of like what you're seeing behind me, where it actually follows movements. It's not just randomly all over the place. No, the markets move. And so again, there is an order to the market. Certain, there's certain aspects of it are uncertain, but there is an order to the markets. And again, there are windows of predictability where we see the same thing happen over and over again. That's where our edge comes from, and that's what we can build a strategy on. One of the big mistakes I see a ton of traders make is they want to build a system where they can take advantage of 50 different things. Well, if this, then this and this. And it's like they're looking for any possible movement in the market. They're going to jump on it and they wind up with this huge mess. And it's not a strategy. It's basically just, I'm going to get in here and fly by the seat of my pants or I'm going to be doing 10 different things. It's like, no, your strategy should be something very clear, like I said, where you're looking for a very specific set of circumstances or a specific. The be the beginning of a pattern that you can now say, all right, if I'm seeing the beginning of this pattern, I know what the rest of the pattern looks like. So this gives me my edge. I can get in. If I can get in at the right time, before the rest of it plays out. Cool. Now the odds are in my favor that I'm going to make money because I'm seeing there's. This is a window of predictability where I know what to expect or I know what's. What is likely to happen. That's what a strategy is all about. What. And like in the mergers and acquisitions world, the investment world in general, you may have heard of the term investment thesis, but that's where you make a statement. And a strategy, same thing. But an investment thesis says, why do you want to invest in this? Why do you think it's a good investment? Explain to me what's the strategy? What's the premise of why you think this will make money? And a strategy should be the same thing. Every strategy needs to have a sound premise. Now, I told you I'd share with you a couple of my favorite strategies. And again, kind of going back to the basics of it, it's like, okay, what is the premise of your strategy? What's. What do we think is going on that we can take advantage of? And so a couple of them, and one of them is my favorite general. Generally speaking, it's called a zigzag pattern. But this is where you see a trend moving in one direction. I think it was Andrews and the guy who developed the Pitchfork method first recognized this, and he called it his action reaction theory. But he basically says, all right, we see a move in the market, something triggers a move in one direction, up or down, and then they'll reach a certain point, and then maybe it may be some profit taking or that now there's going to be a little bit of a correction or retracement, and then the trend will resume. And with Andrews in his Pitchfork method, he was saying the second leg will mirror the first leg, which gave us a really excellent thing there because not only did it give us a target to look for, a price target, how much is it going to move, but also a timeframe in which to expect it to get there. Awesome. So that was, again, one of my favorites. Curious about it. Let me know, we can have a conversation about it. We'll talk about the Anders pitchfork and that whole theory, the action reaction. Awesome stuff. It's a lot of fun to talk. But anyway, so you have zigzags. Now, the reason that this is such a solid strategy is. Okay, so what do we think is going on in the market? Well, something has happened. There's been some news event, some innovation's been developed, some new invention Some new technology, somebody got hired on at the right company, whatever. But we're seeing a move in one direction or the other that all of a sudden, yes, people are buying this, buyers are taking hold because, hey, we have a lot of confidence in this particular instrument and people are buying it and driving the price up and there's some momentum to it and it's going to reach a certain point where, okay, now some of the initial, you know, investors, traders are taking profits, starting to sell off their positions, brings price down a little bit. But hey, the, the trend resumes and the, the momentum continues. So good, solid strategy. Like I said, as far as a basic strategy, it's been around. I liked it from years ago because I think it was around 2012, 2013, somewhere in there, there were a lot of trading competitions going on. And I didn't notice that the winners of most of the competitions that this is the base strategy that they were using. I mean, they had their own twist on it, of course, but this is the one that was winning trading competitions and it was really, it was awesome. So. And again, it's been around for I think like 70, 80 years. It's well proven and there's a good reasoning behind it. Like I said, what we think is going on in the markets, there's a reasoning why we're, why we think this pattern is solid, why we can get in and out of the markets, why we think we know what's likely to happen. So that's one of them, the other one that I like. And it's again, it's very common, a lot of variations on it. And then when you can develop a solid trading system with is moving average crossovers, where you're looking for a reversal and some momentum in the other direction. Cool. Again, it's a momentum strategy, but you're looking for, looking for a specific start of it. And the trigger is the reversal. Where you have the moving averages, you have the fast one crossing over the slower one, maybe the 10 and the 20, the 8 and the 30, 32, whatever. But you're looking for your moving averages to crossover. That's showing a shift in the general sentiment of the market. Whether the markets were kind of flat or they were bullish and now they're bearish. There's been a change of sentiment in the general market. And so it's caused a shift that's enough to move, to have the moving averages cross. Cool. Okay. And with that, again, there's. There the thought is, Tom, we're seeing the shift. We got the moving averages Crossing over. And so it's indicating that there is some momentum in this. It's not just a momentary movement in the price, there's something driving it. And cool. So this is something that we can capitalize on. So those are a couple of my favorite base strategies and here's why I like them. They're very simple, they're very straightforward, based on a solid premise. There's good reasoning behind it and you can develop a good consistent process off of it. That's the other thing that's really cool. So they're very straightforward, they're not super complex. They're not being all super sophisticated and clever and all that kind of stuff. They just plain work. Now you can't just grab what I gave you just now and say, oh, you know, I'm just going to start doing this. You have to think it through. You have to develop the proper process and if you'd like some help with that on how to do that. And even once you do have a proper process, there's still other things because there are good systems out. There have been good systems out there and people still, with those excellent, proven systems available, they're still not able to execute them consistently. That's another. That's other matters. If you like some help of us though, to have a strategy and, and be able to take it to the markets with confidence and with competence so that you're solid going to the markets, you're good at the end of the month, end of the year, you're making money. If you'd like some help with that getting to that point, swing by insideout trading dot com. Book a call with me Inside out trading dot com Right up here and at the top of the page there'll be a link says book a call with Brian. Click on the link, book a call with me. We'll have a conversation about what you got going on, what you're going to run into that's holding you back and your best path forward as far as getting past the obstacles that are holding you back, get you on a good, profitable, enjoyable trading. And so if you know, if you like this video, this is what I make videos about. If you like it, give me a like down below. Subscribe to the channel. I make videos about how to be a successful trader. Not the clever strategies, all the hypey stuff. This is how to be a good trader. This is how to like get good at this. So you make money and it's fun and you're successful. That's what I make videos about. So subscribe to the channel so you get notified when I publish videos and the new new videos are coming out. If you got friends who trade, share it with your friends. Share it on your social channels. I'll let people know what you got going on. And again I hope this has been helpful. It has been great. So I am inside out trading but call with me again. Hope it's been helpful. Talk to you soon. Cheers.