Understanding Your Best Trading
Understanding Your Best Trading
6/8/2025 – What I’ve come to understand is that no amount of focusing on bad trading and trading mistakes is sufficient to create good trading. Good trading comes from zeroing in on what you do well and what makes sense to you and then refining and refining your ways of capitalizing on those strengths. My worst trading comes from focusing on (and chasing) trends. My best trading comes from identifying cycles in markets and identifying when short, medium, and longer-term cycles are lining up. Ironically, many of those trades might look like catching trends early, but those trends are simply the early phases of longer-term cycles. It’s the lining up of multiple cycles that creates the favorable reward-to-risk edge.
Understanding those cycles not only allows for sound entries, but guides the process of holding trades. If you’re oversold across multiple periods and go long, there’s little incentive to take profits when the shortest cycle turns to overbought. Indeed, waiting for the shortest cycle to turn down while the others are still rising and far from their peaks can create opportunities to add to positions.
The challenge of this approach to trading, which I’ll be illustrating in the near future, is that until cycles align, the best trading is no trading. The goal is to find a few meaningful “setups” and exploit them fully. One of the most difficult forms of trading discipline can be the discipline to not trade. That means that the disciplined trader needs the discipline of doing things other than trading during the majority of periods when cycles are not fully aligning. When you know what to look for, your best trades come to you–and there is no need to chase random moves.
