Trust in Your Strategy and Analysis – Avoid the Noise

2022 proved to be quite an eventful year for me personally from a trading perspective. Many of the developments that have transpired during the year have not occurred in decades let alone during my relatively short career as a trader (6 years). Central Banks around the world delivered jumbo sized interest rate hikes in a bid to tame runaway inflation, while the US dollar reached multi-year highs as market participants flocked to the greenback as a viable safe haven option. The effect on markets of many of these moves individually are known and yet together they seemed to catch many a trader including myself out at times. My top lesson learnt for the year is avoid the noise and trust in your own strategy and analysis.

When I say ‘avoiding the noise’ what do I mean? Well, having come from a retail trader background personally it does tend to get lonely at times so being a part of online and social media trading groups helped. However, the downside of this really shone through this year particularly when looking to take a trade that might be countertrend in nature. Case in point was my top trade opportunity for Q4 which was a short on USD/CAD. I had set out clear levels from a technical perspective and researched the potential decisions of OPEC+ regarding supply of oil (correlation of oil and the Canadian Dollar) yet the overall trend remained extremely bullish in nature. The more I read social media boards as well as the opinion of other industry players, the majority of whom remained bullish on the pair, the more I second guessed myself and eventually lacked the conviction to pull the trigger. I had a further opportunity to get involved in the pair lower than I would’ve liked but one that still satisfied my requirements for entry and once again I let the noise from outside dictate my decision.

Moral of the story, I am not saying that you shouldn’t form part of any trading community or read the thoughts and opinions of peers and analysts alike but rather have belief, trust and when the time comes conviction to execute your trade according to your plan, not someone else’s. I acknowledge that the rise of retail trading and social media makes this particularly difficult, yet it is a necessary step in one’s evolution as a trader.